Few homeowners in California have insurance protection against earthquakes
Few people in California have earthquake insurance, and this is being considered a significant problem by the California Earthquake Authority and state lawmakers. The organization has begun working with Assemblyman Ken Cooley in order to address the issue. New legislation has been introduced, highlighting the lack of insurance coverage for the state’s homeowners. The legislation is expected to take effect in 2016 and requires insurers to provide homeowners with easily understood information regarding their insurance coverage and earthquake coverage.
The number of people with adequate insurance protection continues to fall
Approximately 10% of California’s homeowners have insurance protection against earthquakes. Earthquake insurance is becoming increasingly rare among homeowners, but not because insurance companies have stopped offering coverage. In 1994, an estimated 30% of homeowners in Napa Valley had coverage before the strike of the Northridge earthquake. As of last month, only 6% of these people had coverage. The lack of insurance coverage among homeowners may be due to cost and lack of awareness.
Legislation aims to raise awareness about earthquake insurance coverage among homeowners
The legislation aims to address the awareness problem by requiring insurers to send homeowners marketing material concerning their insurance coverage and earthquakes every year. Insurers will also have to explain the role of the California Earthquake Authority, a state-run agency that provides coverage, supplied by private companies, to consumers. The legislation also increases the operation budget for the California Earthquake Authority. Additional funds will come through higher premiums, which are needed because so few people are purchasing insurance coverage.
Homeowners often believe that their policies provide coverage for natural disasters
Many people believe that their homeowners insurance policies provide coverage for a wide range of natural disasters. Earthquakes and floods, however, are not usually covered by a conventional insurance policy and must be purchased as supplemental coverage. When a significant earthquake strikes, many homeowners find that their policies do not offer coverage for the damage caused by such a disaster. As such, these people are typically left to recover from the disaster with their own money.