December 3, 2013 by Canadian Underwriter
The Automobile Club of Southern California has announced what it says is the first-ever homeowners insurance discount for policyholders who obtain earthquake coverage through the California Earthquake Authority.
Beginning Jan. 1, the Auto Club is offering a discount of up to 7% on homeowners insurance policies to 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, which provides the majority of residential earthquake insurance policies in the state, is a publicly-managed, privately-funded not-for-profit organization.
“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,” California’s insurance commissioner Dave Jones commented in a statement.
“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,” he added.
The major earthquake in Northridge, Calif. in 1994 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, the Auto Club noted, citing 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,” noted Auto Club CEO Robert Bouttier. “And the earthquake doesn’t wipe out an existing mortgage, even if it wipes out the house.”