California Earthquake Authority (CEA) adjusted their rates over a 3-year period beginning 7/01/2019. This includes rate changes again on 7/01/2020 and 7/01/2021. With this rate change, according to CEA many policy holders will experience no change, or even a decrease. According to their data, only 15% of policy holders should see an increase.

We have experienced an extreme increase on our client’s premiums throughout the Bay Area, and particularly the Tri-Valley and Contra Costa County. In these areas our clients have seen their premiums more than double in some instances. This includes earthquake insurance policy holders located in Livermore, Pleasanton, Dublin, San Ramon, and Danville.

We want you to know that while CEA may seem like the only option for coverage, there are actually many private insurance companies that offer earthquake insurance in California. Coverage is available from these financially stable companies often at half the cost of CEA’s current rating structure.

Why are some CEA policyholders experiencing a premium increase?

According to CEA, if your premium has gone up, it may be due to one or more of the following factors:

• New science that showed increased earthquake risk in certain locations, as determined by new information on fault system locations.
• Updates to include roof type as a rating factor for homeowners, because roof weight impacts the damageability of a house during an earthquake.
• Expanded foundation-type differentiation to recognize combination (or other type) foundations are more damageable.
• Increased Hazard Reduction Discounts:
  • Other foundation types can now receive a discount of up to 15%.
  • Raised foundations can now receive a discount of up to 25%.
  • To receive the discount, you must have a contractor or structural engineer verify the retrofit by signing your CEA Earthquake Insurance Dwelling Retrofit Verification Form (DRV form) for you to turn in to your participating residential insurer.​
• Refinement in year-of-construction categories, which recognize that construction techniques and building codes have improved over time. Newer construction is expected to perform better in an earthquake.
  • Categories are now:
    • 2005 or later
    • 1990-2004
    • 1980-1989
    • 1960-1979
    • 1940-1959
    • 1939 or earlier

And of course, if the reconstruction cost of your house has increased (as indicated by the insured value on your residential policy), your CEA earthquake insurance premium will also increase.

We at Gene Morgan Insurance Agency are able to help our clients shop for the lowest available premium while not compromising coverage. Call or email us today to request for your free earthquake insurance proposal!