Insurance

What's the difference between a CEA earthquake policy & regular home insurance?

By AAA staff

January 20, 2022

If you own a home in California, it's important to be aware of a very real threat: earthquakes.

A recent study estimates that an earthquake occurs every 3 minutes in California. While the vast majority are small, the state usually sees 2 or 3 earthquakes big enough to damage structures (magnitude 5.5 or higher) each year. And there's always the possibility of a major earthquake, such as the 1994 Northridge quake or the Ridgecrest quakes of 2019, which can cause billions of dollars in damage. That's why it's important to prepare your home for an earthquake ahead of time.

With such an ever-present threat, homeowners are encouraged to have a dedicated California Earthquake Authority (CEA) policy in addition to a standard home insurance policy.

Why do I need a CEA policy for my home?

A standard home insurance policy covers many potential losses a homeowner might face, like damage to the dwelling itself, attached structures (such as a garage), and the personal property inside.

However, this coverage typically doesn't apply in the event of an earthquake. Without a separate CEA policy, earthquake damage—anything from a few broken valuables to catastrophic structural damage that makes your home uninhabitable—would be uninsured.

An aerial view of tract housing in the suburbs of Orange County

Why doesn't standard home insurance cover earthquakes?

Insurance companies might struggle financially to pay out the claims for all the damaged homes after a major earthquake, as some did after the 1994 Northridge earthquake.

That quake led to the establishment of the California Earthquake Authority in 1996 as a privately funded, publicly managed organization aimed at better protecting Californians from earthquake-related losses. Today, the CEA provides 2/3rds of the residential earthquake insurance policies sold in California and has become one of the largest providers of residential earthquake insurance in the world.

How do I purchase a CEA policy?

The CEA doesn't sell policies directly. Instead, they're sold through insurers that work with the CEA, including AAA. If you already have homeowners insurance from an insurer that also offers CEA coverage, you can buy an "add-on" policy through them at any time—there's no need to wait until the main policy renews.

Looking for a CEA earthquake policy for your home? Get a quote today

What are my CEA policy coverage options?

There are 2 main types of earthquake coverage offered by the CEA: a Homeowners Choice policy and a Standard Homeowners policy. These are similar in that they both offer dwelling coverage for any damage to the structure of your home, as well as coverage for any emergency repairs. 

With a Homeowners Choice policy, however, personal property loss and loss-of-use coverage are not automatically included. Instead, you'll either need to purchase these protections separately or forgo them altogether. The deductibles also function differently: With a Homeowners Choice policy, you'll have a separate deductible for personal property protection.

Regardless of the policy, earthquake insurance functions similarly to your basic home insurance policy. The main difference is that the coverage will only apply in the event of an earthquake. Some of the common things that an earthquake policy will cover include:
 

  • Repairs to your home and any attached structures (such as a garage)
  • Emergency repairs needed to prevent future damage to your home
  • The cost of making repairs to comply with current building codes

Another difference is that the deductibles for CEA policies are higher than a standard home policy. Keep in mind that some things may not be included, or are only included if you buy add-on coverage. Examples include:
 

  • Damage to detached structures
  • Masonry repairs (brick, rock, stone, etc.)
  • Chimney damage
A multi-unit residential building seen from below

Are there renters & condo CEA policies?

Yes. Just as homeowners insurance doesn't typically cover earthquake damage in California, the same applies to renters and condo insurance.

Fortunately, condo owners can purchase the same CEA earthquake coverage to protect their condos as homeowners can. The only difference is that condo owners can also purchase something called loss assessment coverage, which can help cover additional fees from your homeowners association as part of your earthquake repairs.

If you're a renter, the good news is that structural damage from an earthquake will generally be your landlord's responsibility. Still, a renters CEA policy allows you to enjoy many of the protections of a regular renters insurance policy—things like personal property damage and loss-of-use coverage—in case of an earthquake.

A collapsed freeway after a major earthquake

Get a quote on a CEA earthquake policy

Earthquake damage typically isn’t covered under a California homeowner’s policy. To protect your home and belongings in the event of an earthquake, you'll need separate coverage1 for costs associated with:

  • Structural damage/rebuilding your home
  • Replacing your personal property
  • Paying for temporary housing
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