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SAN FRANCISCO, CA - On the eve of the 10th anniversary of the Loma Prieta quake, Consumers Union urged the state earthquake agency to improve its policy coverage and educational outreach to reverse a dramatic drop in the number of Californians with earthquake protection. Norma Garcia outlined improvements for the California Earthquake Authority (CEA) at a Senate Committee on Insurance hearing held today in San Francisco.
Before the CEA was created in December 1996, major insurers had about 1.3 million earthquake policies in effect, according to news reports. In April 1999, those same companies had only 940,000 CEA policies.
In her testimony, Garcia outlined the limited coverage consumers receive under the CEA's mini-policy, and the high cost of the CEA's new supplemental coverage. In addition, consumers who do purchase CEA policies risk paying a surcharge if a quake causes damages beyond the CEA's ability to pay in full. At the same time, some private companies have re-entered the earthquake market and are offering more coverage for lower premiums than the CEA to qualifying homeowners. However, few California homeowners know of these new policies because the insurers that dominate the California homeowners insurance market offer only CEA policies.
Garcia did applaud the CEA's new mitigation program, called the State Assistance for Earthquake Retrofitting (SAFER) Program in eight Bay Area counties. Eligible consumers receive a free seismic assessment of their home, access to a pool of contractors deemed "qualified" by the CEA, and a choice of financing options to pay for any necessary retrofitting. Those completing the program then qualify for a five percent discount on a CEA earthquake insurance policy. However, the program currently warns interested consumers that "because of the large volume of requests…it may take several months for some inspections to be completed."|
Garcia urged the following improvements for the CEA:
[Editors Note: For a copy of Garcia's testimony, click here.]
Consumers Union, publisher of Consumer Reports, is an independent, nonprofit testing and information organization, serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition, and other consumer concerns. Since 1936, our mission has been to test products, inform the public, and protect consumers.
