California is home to a significant majority of the nation's earthquakes, which are not covered under standard business and home insurance policies. Instead, the state's residents may purchase coverage through private insurers or the California Earthquake Authority.
But now, a new catastrophe insurance policy could help the state's residents recover from such natural disasters, according to Glenn Pomeroy, CEO of CEA.
Pomeroy testified before the U.S. House of Representatives Committee on Financial Services and two subcommittees to discuss the benefits of a new bill titled H.R. 2555. By increasing the federal borrowing guarantee, the CEA would be able to lower its premiums and make earthquake insurance affordable for more Californians. Enabling more Californians to purchase insurance would also reduce the cost incurred by the federal government after a disaster.
"The CEA strongly believes that by offering a more affordable, more valuable earthquake insurance policy, many more Californians could and would decide to insure their homes for an earthquake loss," Pomeroy said.
Unlike most insurance deductibles, those received from the CEA are calculated as a percentage rather than a dollar amount.The privately funded, publicly managed organization usually offers deductibles at about 15 percent of the property's replacement cost.