California Property & Casualty Broker-AgentMiscellaneousMedium
A homeowner's policy specifically excludes damage caused by earth movement, including earthquakes. To obtain coverage for earthquake damage to their dwelling and personal property, what specific type of insurance would they need in California?
- AA separate earthquake policy, most likely through the California Earthquake Authority (CEA).
- BA comprehensive peril policy that includes all natural disasters.
- CA separate flood insurance policy through the NFIP.
- DAn endorsement added to their existing homeowner's policy.
Show answer & explanationAnswer & explanation
Correct answer: A. A separate earthquake policy, most likely through the California Earthquake Authority (CEA).
In California, earthquake damage is typically excluded from standard homeowners' policies. The primary way to obtain this coverage is through a separate earthquake insurance policy, most commonly offered by the California Earthquake Authority (CEA), or from private insurers.
Why the other options are wrong
- B. There is no single 'comprehensive peril policy' that automatically includes earthquake in California; it requires specific, separate coverage.
- C. Flood insurance covers rising water, not earth movement.
- D. While some insurers may offer endorsements, dedicated standalone policies, especially from CEA, are the most common and comprehensive solution for earthquake coverage in CA.
California Earthquake Authority (CEA)
A publicly managed, privately funded organization that provides earthquake insurance policies to California homeowners, renters, and condo owners.
- Offers separate policies, not endorsements to standard homeowners insurance.
- Coverage includes dwelling, personal property, and additional living expenses.
- Policies often have high deductibles (e.g., 5% to 25%).
Memory trick: Earthquakes need the CEA, as home policies shake them away.