Most California homeowners know a home insurance policy does not cover earthquake damage. Fewer know what happens after they buy the earthquake policy. In Speaking of Insurance episode 37, Aaron Bollinger of Bollinsure Insurance Services walks through how that policy pays: a deductible measured in six figures, contents that can depend on damage to the house, and loss of use that works differently from both.

Whether the coverage is worth buying is a different question. Episode 12 and the California flood and earthquake guide walk through that decision. This page stays on how a policy pays once the numbers are in front of you. The issued policy controls.

The deductible is a percentage of the dwelling limit

The earthquake deductible is 5, 10, 15, 20, or 25 percent of the dwelling limit. It is not a percentage of the damage. The dwelling limit the percentage applies to is Coverage A plus Coverage B. On a CEA homeowners policy, that dwelling limit is set to match the homeowners dwelling limit.

A 15 percent deductible on an $800,000 dwelling limit is $120,000. Damage below that amount does not start the dwelling payment. Damage above it pays the amount that is left, up to the limit.

Who can choose 5 percent or 10 percent

Around 3:50, the CEA rule in the episode is this. A home with a dwelling limit over $1,000,000 cannot choose the 5 percent or 10 percent deductible. The same limit applies to a pre-1980 raised foundation frame home without a verified retrofit. Those homes choose 15, 20, or 25 percent.

Coverage A, B, C, and D

Around 3:25, the words spoken as covered B mean Coverage B, the extensions of the dwelling. Coverage A is the dwelling. Coverage C is contents. Coverage D is loss of use.

Coverage C and Coverage D are chosen separately. They do not automatically copy the contents limit or the loss of use limit on the homeowners policy. Read each one on the earthquake declarations.

Standard and Homeowners Choice

The episode separates two CEA forms by how they treat contents.

  • Standard. Contents are paid only once the dwelling deductible is exceeded.
  • Homeowners Choice. Contents have their own deductible. Around 5:37, that contents deductible is waived once the dwelling deductible is met. Homeowners Choice contents limits run from $5,000 to $25,000. A Homeowners Choice policy can be dwelling coverage only.

Loss of use, emergency repairs, and code upgrades

Loss of use has no deductible. It includes the time a civil authority keeps you out of the home. It is not held back by the dwelling deductible the way contents are on the standard form.

Emergency repairs pay the first $1,500 with no deductible.

Building code upgrade coverage includes $10,000. Optional limits of $20,000 and $30,000 can be added. Code upgrade coverage is paid after the dwelling deductible is met.

What the earthquake policy leaves out

The episode names the exclusions to keep separate from shaking damage: flood, tsunami, land, vehicles, and fire. Fire that follows an earthquake is the next section. The other four stay outside this policy.

Retrofits and Brace + Bolt

A verified seismic retrofit can change the premium. The episode describes retrofit discounts of up to 25 percent. A discount on one policy is not a promise that every carrier prices a retrofit the same way. Ask which retrofit the quote used.

Brace + Bolt grants of up to $3,000 are run through the California Residential Mitigation Program. Eligible zip codes change each year. The grant is not the same thing as the premium discount, and a zip code that qualified last year is a question for the current program list.

Fire following an earthquake

Around 8:40, fire that follows an earthquake goes to the fire or homeowners policy, subject to that policy's terms and deductible. The California law the episode names is Insurance Code section 10088.5.

Private coverage and surplus lines

CEA is not the only place earthquake coverage is written. The episode also covers private earthquake policies and surplus lines. Around 9:50, the words spoken as sometimes worse to the CEA mean sometimes worse than the CEA. Compare the deductible, the limits, and the exclusions on the form you are shown.

The CEA is a publicly managed, not-for-profit earthquake insurer. Participating home insurance companies sell its policies. Surplus lines earthquake coverage does not have California Insurance Guarantee Association (CIGA) backing. That trade-off belongs in the comparison, next to the price and the limits.

A Pasadena example

The recording uses a 1962 Pasadena home. The limit is $800,000. The deductible is 15 percent, which is $120,000. These figures are the example. They are not a quote.

  • $210,000 of earthquake damage. The dwelling payment is $90,000. The example also pays $18,000 of contents and $22,000 of loss of use.
  • $70,000 of earthquake damage. The dwelling and the contents pay nothing. The damage is under the $120,000 deductible, and on the standard form contents pay only after that deductible is met.
  • A $40,000 kitchen fire. That loss goes to the homeowners policy.

Three mistakes, five items, four questions

The episode closes with three common mistakes, five items to bring to a review, and four questions to ask. Those lists are in the recording. Bring the homeowners declarations, the earthquake declarations if you have them, the dwelling limit, the deductible percentage, and the contents and loss of use choices you were shown.

See home insurance in California, or request an earthquake coverage review. You can also call 562-268-9355.

This guide is general educational information. It is not legal, tax, or coverage advice. Coverage, eligibility, and pricing depend on the carrier, underwriting, and your policy terms. CA License 6013787.

Sources and Further Reading