Individual Earthquake Insurance and California Earthquake Authority (CEA)
We are often asked by unit owners about what they can do to protect themselves against Earthquake Exposure/Damage.
This is a good question, and the type and amount of coverage is somewhat determined by whether or not your Association carries Earthquake coverage. In either case, you have exposures that are your responsibility to understand and address.
There are four basic coverages available to individual condo owners. The California Earthquake Authority is the largest writer of individual Earthquake coverage in California.
- Earthquake Personal Property Coverage – This section of the individual unit owner’s earthquake policy would cover the contents within your unit; such as your electronics, clothes, furniture, etc., from a loss due to earthquake.
- Earthquake Loss of Use Coverage - This section of the individual unit owner’s earthquake policy would cover additional living expenses (hotel, dining out, etc.) while your unit is uninhabitable due to damage from an earthquake.
- Earthquake Real/Building Property Coverage - This section of the individual unit owner’s earthquake policy would reimburse you for any damaged structural components within the interior of your unit that you are responsible to maintain, repair, or insure. This would include such things as built in cabinets & appliances, floor coverings, non-load bearing walls, as well as other attached fixtures.
- Earthquake Loss Assessment Coverage - The standard loss assessment coverage under a majority of HO-6/Individual unit owner policies explicitly excludes a special assessment for damage caused due to an earthquake. In the event of an earthquake loss it’s more than likely the Board would have no other option but to make a special assessment against all unit owners. The special assessment will impact all; regardless of whether or not your unit suffers direct damage from the earthquake. The unaffected unit owners will still be required to pay for their equitable share of the earthquake damage to the common property within the Association. If your Association has a master earthquake policy the Board will possibly assess you for your share of the deductible amount, which is often extensive. If your Association does not have a master earthquake policy the Board will have to assess all unit owners for the total cost to rebuild or reconstruct the damage without the help of insurance. While your individual loss assessment coverage will more than likely come short of this larger amount, it will definitely help to diminish your out-of- pocket loss in this scenario.
There are other insurers offering Earthquake coverage in addition to the CEA. You should speak with your individual
agent/broker about your options. The CEA offers a number of different coverage limits and deductibles. You may go to www2.earthquakeauthority.com to obtain more information.
This is only a general description of coverages and the policy should be consulted for all limitations and exclusions.