According
to the U.S. Geological Survey, there is a 70 percent probability that
an earthquake of magnitude 6.7 or larger will strike the San Francisco
Bay Area during the next 30 years. However, while Californians live with
earthquakes, roughly 12 percent of California homeowners purchase
earthquake insurance.
Nonetheless, Californians buy the most
earthquake insurance in the nation. According to National Association of
Insurance Commissioners, quake insurance premiums in California totaled
more than $966 million in 2008. That was more than six times the
earthquake insurance business done in any other state, and more than
half the national total of $1.82 billion.
Insurers in California
are required by state law to offer earthquake insurance to their
homeowner insurance customers. These policyholders can decide not to
purchase earthquake coverage or to purchase it from another source.
Prior
to 1994, approximately 28 percent of Californians carried earthquake
insurance. Traditional policies carried a 10 percent deductible and
provided unlimited coverage for contents and additional living expenses.
The policies were offered by the homeowner insurer, and sold as an
endorsement to the homeowner insurance policy.
On January 17,
1994, the Northridge earthquake shook Southern California. The magnitude
6.7 quake caused an estimated $15 billion dollars in insured damage –
more than anyone expected from an earthquake of that size. The insurance
industry sustained dramatic losses, paying out more in Northridge
claims than it had collected in earthquake insurance premium in the
preceding 30 years. While no licensed insurer went insolvent due to the
catastrophe, some came very close.
In order to recover surplus,
and to protect against another earthquake, insurers began limiting their
earthquake exposure by reducing their volume of new homeowner policies.
In addition, most insurers filed for rate increases, coupled with
increases in the deductible from 10 percent to 15 percent or higher.
In
1995, the state Legislature passed Assembly Bill 1366, which authorized
insurers to offer a “mini” earthquake policy with substantially reduced
policy limits to comply with the mandatory offer of earthquake
insurance. In essence, the traditional earthquake insurance policy
became a catastrophe policy designed to get homeowners with severe
earthquake damage back into a safe home.
The mini policy was the
first step toward the establishment of the California Earthquake
Authority. The CEA was established in 1996 to make basic earthquake
coverage available at an affordable price. It is now the world’s largest
provider of earthquake insurance.
Copyright
2014
Insurance Information Network of California
. All rights reserved.
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The Evolution of Earthquake Insurance
Wednesday, March 19, 2014
| Labels: California earthquake insurance, earthquake insurance santa barbara, santa barbara insurance agents | 0 comments | |
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Earthquake Insurance Recent Poll
Wednesday, January 22, 2014
Northridge Anniversary: Surprising Poll Results 20 Years After Costliest Earthquake in U.S. History
Comparable Quake Today Would Cause $24 Billion in Insured Losses; Those Most at Risk Don’t Buy Coverage
NEW YORK, January 13, 2014 — A recent poll by the Insurance Information Institute (I.I.I.) found that only one out of 10 American homeowners (10 percent) have earthquake insurance, compared with 13 percent in 2012. In western states, 22 percent of homeowners said they have earthquake insurance, down from 27 percent.“When the Northridge earthquake happened 20 years ago, we estimated that nearly 29 percent of homeowners in California had earthquake coverage,” said Pete Moraga with the Insurance Information Network of California (IINC). “However today, according to the California Department of Insurance, only about 10.6 percent of homeowners have the coverage.”“While the number of people buying earthquake insurance has declined, the potential cost of U.S. earthquakes has been growing because of increasing urban development in seismically active areas and the vulnerability of older buildings, which may or may not have been built or upgraded to current building codes,” said Dr. Robert Hartwig, CPCU, an economist and president of the I.I.I.| Labels: California earthquake insurance, California homeowners policy, Earthquake Insurance California | 0 comments | |
Showing posts with label California earthquake insurance. Show all posts
Showing posts with label California earthquake insurance. Show all posts
