Nearly 20 years after one of Southern California’s most devastating earthquakes in Northridge and four years after the 7.2 Easter Sunday earthquake near Calexico, millions of residents have not yet taken steps to protect themselves with earthquake insurance. Today, California Insurance Commissioner Dave Jones is joined by California Earthquake Authority (CEA) CEO Glenn Pomeroy and Robert Bouttier, CEO of the Automobile Club of Southern California, at the Auto Club’s San Diego branch to announce the first-ever homeowners insurance discount for those who obtain CEA earthquake coverage through the Auto Club.
The discount of up to seven percent on homeowner insurance policies, which took effect Jan. 1, is available to Auto Club members who insure their single-family homes through the Auto Club’s affiliated insurer, and also purchase or renew a CEA earthquake insurance policy. The CEA provides the majority of California residential earthquake insurance policies.
“Efforts such as this first-of-its kind discount are important incentives to encourage more homeowners to protect themselves against the potential for devastating loss,” said Commissioner Jones. “In California, it’s not a question of if, but rather when the next big earthquake will strike. Living in earthquake country means taking steps to protect your biggest asset from damage and loss.”
“CEA earthquake insurance provides California residents with the financial strength to rebuild and recover after a damaging earthquake,” said Glenn Pomeroy, CEO of the CEA. “As a not-for-profit organization, we’re dedicated to delivering a variety of coverage options to meet policyholder needs. Our coverages can help protect more Californians and enable our communities to get back to normal as quickly as possible.”
Auto Club CEO Bouttier said that Auto Club members who choose to take advantage of the discount can contact their agent or call 888-887-4843 to add a CEA policy if they do not already have one. Auto Club insurance agents are authorized to provide CEA policy quotes and sell CEA policies.
“We believe this new homeowners insurance discount will be an incentive for our members to protect themselves from potential financial devastation in the event of an earthquake,” said Bouttier. “We know there are many reasons why homeowners do not purchase earthquake insurance. But we also know that without it, they are at risk of losing their homes with little to no chance of being able to afford to rebuild. San Diegans need to remember that a number of fault lines run under this area, putting their homes at risk of destruction or major damage in an earthquake.”
The 2010 Easter Sunday earthquake near Calexico was felt by at least 20 million people in the U.S., according to the U.S. Geological Service. While it did not cause major amounts of damage to homes, an earthquake of the same magnitude occurring along a local fault such as the Rose Canyon faultline could potentially cause billions of dollars in damage to homes.
The 1994 Northridge earthquake damaged or destroyed 7,000 single-family homes and caused direct estimated losses of about $25.7 billion, with about half of that financial loss occurring because of damage or destruction to wood-frame homes, according to the Public Policy Institute of California.
“While earthquake insurance does have a significant deductible, it’s a lot simpler to get a smaller loan to cover the deductible, if needed, than to get a large loan to cover the entire cost of rebuilding a house,” Bouttier said. “And the earthquake doesn’t wipe out an existing mortgage, even if it wipes out the house.”