California Insurance Commissioner Ricardo Lara and the California Earthquake Authority (CEA) are to send a notice to re/insurers following reports that some companies may be declining to write earthquake policies in the state.
Kern County in southern California was struck by a magnitude 6.4 earthquake on July 4, followed by a stronger magnitude 7.1 earthquake on July 5.
The quakes were the strongest to hit the state in two decades and caused “significant damage” to the town of Ridgecrest and the surrounding area.
However, California authorities believe that some misinformation has sprung up in the days following the quakes regarding an alleged moratorium on new earthquake insurance policies.
CEA policies state that, for new policies purchased after an event, insureds have a 15 day period when they will not be covered for damages that result from earthquakes seismically related to the initial event.
Reports suggests that some insurers may be mistaking the 15-day waiting period with an outright moratorium on the purchase of a CEA policy.
Accordingly, Commissioner Lara announced that he will issue a notice to insurers advising them that refusing to write CEA earthquake insurance coverage for an existing residential policyholder is not in compliance with state law.
“Our first major earthquakes in years have Californians asking if earthquake insurance is right for them. I am concerned about reports that some insurers and agents are telling consumers there is a moratorium, when in fact you can buy earthquake insurance today,” said Lara.
“While we have Californians’ attention, insurers should not create barriers to homeowners or renters who want to protect their assets from earthquakes,” he added.
“CEA policies can be purchased anywhere in California, at any time, and by anyone who has a home insurance policy with one of our participating insurers,” CEA Chief Executive Officer (CEO) Glenn Pomeroy clarified.
Lara also warned California residents that a standard homeowners’ policy will not cover earthquake damages.
“Without specific earthquake coverage, you are responsible for all costs to repair, rebuild or replace your home and personal property,” he explained.