While the rest of the country watches for hurricanes, Californians are wondering when the next large earthquake will occur. Unfortunately, there is very little time to prepare for an earthquake as there really are not sufficient warning signs that can allow homeowners and businesses to pack up or board up their breakable belongings. Although most California homeowners do not have earthquake insurance, for those who do, they will find that a few significant changes in the California Earthquake Authority (CEA) policy may require closer scrutiny of their policies to suit their needs. When purchasing an insurance policy, home and business owners should be vigilant to ask their broker or agent what changes are being made to their policy and what options are available to add coverage.
This year as my earthquake policy went up for renewal, I called my agent to provide payment. As I voiced my ever frustrated opinion regarding the low limits of additional living expenses under the CEA policy of $25,000, I was surprised by my agent’s response. I was asked two things:
- Would I like to raise my additional living expense coverage; and
- Would I like to cover my breakable personal property?
I asked for specifics. Apparently, the CEA recognizes that in California, a $25,000 limit does not go a long way and therefore, upon renewal, insureds may add premiums to pay for a higher coverage amount. What I was confused about and voiced concern over was the fact that I had personal property coverage under my CEA policy. I told my agent, “I don’t need coverage for my clothing destroyed from an earthquake, are you telling me my breakable personal property isn’t already covered?” The response was that the CEA added an endorsement called Coverage for Breakables. Upon presentation of the new policy language from the CEA, I discovered this endorsement changes the wording of my policy. Breakables are characterized as “glassware, crystal, china, ceramic pottery, and porcelain items created as table settings, serving ware, or otherwise intended for use in serving or consuming food or beverage, whether currently being used for that purpose or not and figurines, vessels, vases and other ornamental items made of crystal, china, pottery, ceramics, porcelain, glass, or marble.” Without purchase of the breakables endorsement, none of these items would be covered if an earthquake occurs. As a consumer, I am not worried about soft goods being ruined from the shaking of an earthquake, but rather the very “breakables” defined in the policy. Without spending that extra amount for the endorsement, like most consumers out there, my personal property coverage is almost meaningless since these are the very items I expect to be lost in the event of an earthquake.
For those with CEA coverage, with the introduction of these changes to your policy and possibility of purchase of additional living expenses, review your policy and endorsement options with your agent or broker regularly to avoid missing out on proper utilization of earthquake coverage.