Many California residents recently received an awful surprise when they discovered that their earthquake insurance rates significantly increased. This was confusing to many because they had not experienced any earthquakes during that time.
The California Earthquake Authority (CEA) is a public-private partnership that manages the majority of earthquake insurance policies in the states. The CEA admits that they did raise rates for about one in four of their policyholders over the summer.
Sarah Sol, a CEA spokesperson, spoke with NBC Bay Area about these recent rate increases. “As a not-for-profit, our rates are based on the best available scientific information about earthquake risk,” Sol explained. “Our new rates take into account the most recent Uniform California Earthquake Rupture Forecast (UCERF3), which recognized increased risk of larger earthquakes in California and the potential for multi-fault ruptures (like what happened in 2016 in Kaikoura, New Zealand, and in 2011 in Tohoku, Japan).”
While this logic makes sense from the insurers perspective, it can be incredibly frustrating for the average consumer. NBC spoke with one local resident who saw their rates more than double overnight, despite no earthquakes in their area.
This puts insurers like the CEA in a tricky spot. On the one hand they need to utilize all available data to make accurate predictions, so they can accurately price their product. On the other hand they need to realize that the average homeowner can only afford to pay so much for earthquake insurance. And since an earthquake insurance policy is entirely optional, if rates continue to rise more people may decide to roll the dice and forgo a policy altogether.
If you want to learn more about your current insurance policy, or just want to learn about your options for an entirely new policy, we encourage you to reach out to TGS Insurance. The TGS staff are experts in their field and are always willing to work with you to find the right policy for your lifestyle and your budget. Visit www.tgsinsurance.com to learn more.