Home, auto, umbrella, earthquake insurance CA

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moi
Posts: 75
Joined: Fri Nov 04, 2016 1:33 am

Home, auto, umbrella, earthquake insurance CA

Post by moi »

Recently my insurance company GEICO/Homesite raised my home insurance premium from $2648 to $3549!! Also it opted out of participating in California Earthquake Authority for earthquake insurance, so my earthquake insurance went up from $1500 or so to $2200!! So, I’ve been shopping around for new insurance.

I have a home built in 1997, wood frame with stucco exterior, two floors, living space above attached garage, on concrete slab foundation. It is located within 1 mile of a fault, but thankfully not on a liquefaction or landslide zone, but immediately adjacent to one (according to https://maps.conservation.ca.gov/cgs/EQZApp/app/)

I’ve never filed a claim on the home. I’ve never filed a claim on my two cars.

These are the coverages I am going for. There are ranges for the coverage options because each company has a different requirement for the minimum:

Home:
Deductible: $5000
Dwelling: $750000 to $800000
Extended replacement cost 20-30% beyond dwelling replacement
Personal property $400000 to $600000
Loss of use $150000 to $240000

Earthquake
Deductible: 10% (I chose this because 15% is way more than my emergency fund)
Dwelling: $750000 to $800000
Personal property $150000
Loss of use $100000

Umbrella coverage: $2,000,000.
Auto insurance. Not going to go into details, but the coverage is the minimum allowed by the umbrella. The parameters I have chosen is $250 deductible for comprehensive and $1000 for collision. I kept $250 deductible for comprehensive because raising it save me only like $20-30 a year. Raising the collision deductible made a big difference though.

Here are the quotes I got:
1- GEICO auto + GEICO umbrella + Amica Homeowner + CEA earthquake policy = premium $6385.
a. The Amica HO insurance is a better product because it’s HO5 not HO3 policy, $800000 dwelling, 30% extended replacement, Personal property $400000, Loss of use $240000

2- All Amica + CEA earthquake policy = premium $6541
a. Amica gives a hefty discount on HO policy and bundled with their auto policy, which is quite expensive. They say they use better parts than GEICO for auto repair

3- All State Farm + CEA earthquake = premium $6773.
a. This HO is also quite good: HO5 not HO3 policy, $800000 dwelling, 20% extended replacement, Personal property $600000 (not sure why so high, and I can’t adjust down), Loss of use $240000

4- GEICO auto + GEICO umbrella + All State Homeowner + CEA earthquake policy = $5827.
a. The All State HO insurance is not as good: HO3 policy, $750000 dwelling, 25% extended replacement, Personal property $562000, Loss of use $150000

5- GEICO auto + GEICO umbrella + Liberty Mutual Homeowner + CEA earthquake policy = $6045.
a. The HO insurance: HO3 policy, $2500 not $5000 deductible (can’t go any higher), $742000 dwelling, 20% extended replacement, Personal property $556000, Loss of use: 2 years of payment (this is unique in that there’s no dollar amount, but they promise to pay for 2 years of housing while home is being rebuilt).
b. Liberty Mutual is a GEICO affiliate. Liberty mutual is listed on CEA website as participating insurer, so I assume if I get liberty mutual HO I can later buy CEA earthquake insurance. The GEICO agent who was trying to sell the Liberty Mutual HO insurance says though he doesn’t know for sure if I will be able to buy the CEA insurance later on my own.

6- MY CURRENT POLICY. GEICO auto + GEICO umbrella + Homesite Homeowner + Homesite earthquake policy = $8041 !!!!
a. This HO policy is the WORST: $645000 dwelling, 25% extended replacement, Personal property $327000, Loss of use $130000


During this search I’ve found
1. GEICO auto insurance is the most competitive, even when unbundled from the homeowner’s policy it sells (like Liberty Mutual, Zurich, Homesite, Traveler’s). It’s $600 to $1400 cheaper!
2. Is there concern about GEICO using worse auto repair parts? The Amica agent said their auto insurance policy costs more ($1000 more) because they use new parts.
3. CEA earthquake policy is significantly cheaper than others offered by the insurance company itself.
4. I’ve been told bey the GEICO sales agent that CEA earthquake policy is not as good as one sold be an insurance company. But the earthquake policy from an insurance company is about $800 more per year compared to CEA policy. He said CEA is underfunded and in a major disaster, the late claim filers will not get any payout when the funds run out. Not sure if that’s true or not.


Questions
1. Is there any risk to have auto/umbrella from GEICO and homeowner’s and earthquake from another insurance company (especially one that’s not sold or affiliated with GEICO)?
2. Related to #1. I like the idea of GEICO auto + umbrella + Liberty Mutual HO policy, because Liberty Mutual is an GEICO affiliate, so there is less worry about the overlap between GEICO umbrella and Liberty Mutual HO. Is that a real advantage? If I go this route though I’ll need to buy CEA earthquake coverage on my own, which I’m not sure is possible since the GEICO agent just doesn’t know.
3. Is it worth it to pay extra for HO5 policy rather than HO3 policy?
4. Are there any concerns about CEA being able to payout in the event of something like a 1994 Northridge Earthquake? My search of prior threads found mixed opinions on this.
5. So far, I’ve limited my insurance bundle search only to large insurers (who I believe have more solid financial strength to backup the claim) who also participate in CEA earthquake insurance, because the CEA earthquake insurance is cheaper than ones offered by the HO insurance company itself. Other insurance companies I plan to get a quote from include: Nationwide, Progressive, SoCal AAA, which participate in CEA. Is my thinking flawed and should I cast a wider net to insurance companies that don’t participate in CEA earthquake insurance?
6. Are there other California residents who are insured for all four? How are you insured? Mix and matched the policies or bundle them all under the same insurer? Who are you insured with? How have your experience been with your current insurer in claims processing or annual raise in premium?

Thanks everyone in advance for your suggestions and the deep knowledge and experience of this community.
Last edited by moi on Sat Dec 04, 2021 10:31 am, edited 1 time in total.
Best, | moi
denovo
Posts: 4808
Joined: Sun Oct 13, 2013 1:04 pm

Re: Home, auto, umbrella, earthquake insurance CA

Post by denovo »

Remember insurance salesmen are salesmen. CEA is the best for earthquake. They have been collecting premiums for over 20 years without a major earthquake. Other competitors are Johnny Come Latelies with smaller reserves. Here is what Fitch has to say.

https://www.fitchratings.com/research/i ... 12-10-2021
Fitch believes the CEA's financial flexibility is much stronger than similarly rated private insurers that insure catastrophe risk, which allows its final rating to be elevated a full category above the risk assessment of claims paying resources, to 'A'. The state of California, the insurance industry in California and policyholders in California all have an interest in the CEA's continuance as an organization in Fitch's view. Also contributing to the CEA's financial flexibility are its strong capital formation rate and the ability to access capital markets to issue additional revenue bonds.
"Don't trust everything you read on the Internet"- Abraham Lincoln
denovo
Posts: 4808
Joined: Sun Oct 13, 2013 1:04 pm

Re: Home, auto, umbrella, earthquake insurance CA

Post by denovo »

moi wrote: Sat Dec 04, 2021 2:52 am


Questions
1. Is there any risk to have auto/umbrella from GEICO and homeowner’s and earthquake from another insurance company (especially one that’s not sold or affiliated with GEICO)?
2. Related to #1. I like the idea of GEICO auto + umbrella + Liberty Mutual HO policy, because Liberty Mutual is an GEICO affiliate, so there is less worry about the overlap between GEICO umbrella and Liberty Mutual HO. Is that a real advantage? If I go this route though I’ll need to buy CEA earthquake coverage on my own, which I’m not sure is possible since the GEICO agent just doesn’t know.
3. Is it worth it to pay extra for HO5 policy rather than HO3 policy?
4. Are there any concerns about CEA being able to payout in the event of something like a 1994 Northridge Earthquake? My search of prior threads found mixed opinions on this.
5. So far, I’ve limited my insurance bundle search only to large insurers (who I believe have more solid financial strength to backup the claim) who also participate in CEA earthquake insurance, because the CEA earthquake insurance is cheaper than ones offered by the HO insurance company itself. Other insurance companies I plan to get a quote from include: Nationwide, Progressive, SoCal AAA, which participate in CEA. Is my thinking flawed and should I cast a wider net to insurance companies that don’t participate in CEA earthquake insurance?

Thanks everyone in advance for your suggestions and the deep knowledge and experience of this community.

1. No.
2. Affiliate is a meaningless marketing term. They are independent companies
3. HO5 is better because its not named perils for personal property and also its replacement cost. HO3 is typically named perils and only cash value unless there is a specific endorsement. However you should check, for example my Progressive HO insurance policy is "HO3" but I have the HomeShield Plus package which gives me open perils and replacement cost for personal property, so its basically an HO5.
4. See my first post. CEA is great.
5. Stick to those that participate in CEA. Wawanessa is another one that should go on your list. To save yourself time I bet there is only 1 percent chance that anyone beats GEICO on car even with a bundle discount. I found this out a few months ago. As you pointed out, your are better off shopping homeowners separately.

I am sure Allstate has a policy with the personal property referenced above either as H05 or an endorsement like Progressive.
"Don't trust everything you read on the Internet"- Abraham Lincoln
Topic Author
moi
Posts: 75
Joined: Fri Nov 04, 2016 1:33 am

Re: Home, auto, umbrella, earthquake insurance CA

Post by moi »

denovo wrote: Sat Dec 04, 2021 3:21 am
moi wrote: Sat Dec 04, 2021 2:52 am


Questions
1. Is there any risk to have auto/umbrella from GEICO and homeowner’s and earthquake from another insurance company (especially one that’s not sold or affiliated with GEICO)?
2. Related to #1. I like the idea of GEICO auto + umbrella + Liberty Mutual HO policy, because Liberty Mutual is an GEICO affiliate, so there is less worry about the overlap between GEICO umbrella and Liberty Mutual HO. Is that a real advantage? If I go this route though I’ll need to buy CEA earthquake coverage on my own, which I’m not sure is possible since the GEICO agent just doesn’t know.
3. Is it worth it to pay extra for HO5 policy rather than HO3 policy?
4. Are there any concerns about CEA being able to payout in the event of something like a 1994 Northridge Earthquake? My search of prior threads found mixed opinions on this.
5. So far, I’ve limited my insurance bundle search only to large insurers (who I believe have more solid financial strength to backup the claim) who also participate in CEA earthquake insurance, because the CEA earthquake insurance is cheaper than ones offered by the HO insurance company itself. Other insurance companies I plan to get a quote from include: Nationwide, Progressive, SoCal AAA, which participate in CEA. Is my thinking flawed and should I cast a wider net to insurance companies that don’t participate in CEA earthquake insurance?

Thanks everyone in advance for your suggestions and the deep knowledge and experience of this community.

1. No.
2. Affiliate is a meaningless marketing term. They are independent companies
3. HO5 is better because its not named perils for personal property and also its replacement cost. HO3 is typically named perils and only cash value unless there is a specific endorsement. However you should check, for example my Progressive HO insurance policy is "HO3" but I have the HomeShield Plus package which gives me open perils and replacement cost for personal property, so its basically an HO5.
4. See my first post. CEA is great.
5. Stick to those that participate in CEA. Wawanessa is another one that should go on your list. To save yourself time I bet there is only 1 percent chance that anyone beats GEICO on car even with a bundle discount. I found this out a few months ago. As you pointed out, your are better off shopping homeowners separately.

I am sure Allstate has a policy with the personal property referenced above either as H05 or an endorsement like Progressive.
Thanks denovo. That is very helpful.

Do you mind sharing how you are insured? Mix and matched the policies or bundle them all under the same insurer? Who are you insured with? How have your experience been with your current insurer in claims processing or annual raise in premium?
Best, | moi
Topic Author
moi
Posts: 75
Joined: Fri Nov 04, 2016 1:33 am

Re: Home, auto, umbrella, earthquake insurance CA

Post by moi »

denovo wrote: Sat Dec 04, 2021 3:21 am
moi wrote: Sat Dec 04, 2021 2:52 am


Questions
1. Is there any risk to have auto/umbrella from GEICO and homeowner’s and earthquake from another insurance company (especially one that’s not sold or affiliated with GEICO)?
2. Related to #1. I like the idea of GEICO auto + umbrella + Liberty Mutual HO policy, because Liberty Mutual is an GEICO affiliate, so there is less worry about the overlap between GEICO umbrella and Liberty Mutual HO. Is that a real advantage? If I go this route though I’ll need to buy CEA earthquake coverage on my own, which I’m not sure is possible since the GEICO agent just doesn’t know.
3. Is it worth it to pay extra for HO5 policy rather than HO3 policy?
4. Are there any concerns about CEA being able to payout in the event of something like a 1994 Northridge Earthquake? My search of prior threads found mixed opinions on this.
5. So far, I’ve limited my insurance bundle search only to large insurers (who I believe have more solid financial strength to backup the claim) who also participate in CEA earthquake insurance, because the CEA earthquake insurance is cheaper than ones offered by the HO insurance company itself. Other insurance companies I plan to get a quote from include: Nationwide, Progressive, SoCal AAA, which participate in CEA. Is my thinking flawed and should I cast a wider net to insurance companies that don’t participate in CEA earthquake insurance?

Thanks everyone in advance for your suggestions and the deep knowledge and experience of this community.

1. No.
2. Affiliate is a meaningless marketing term. They are independent companies
3. HO5 is better because its not named perils for personal property and also its replacement cost. HO3 is typically named perils and only cash value unless there is a specific endorsement. However you should check, for example my Progressive HO insurance policy is "HO3" but I have the HomeShield Plus package which gives me open perils and replacement cost for personal property, so its basically an HO5.
4. See my first post. CEA is great.
5. Stick to those that participate in CEA. Wawanessa is another one that should go on your list. To save yourself time I bet there is only 1 percent chance that anyone beats GEICO on car even with a bundle discount. I found this out a few months ago. As you pointed out, your are better off shopping homeowners separately.

I am sure Allstate has a policy with the personal property referenced above either as H05 or an endorsement like Progressive.
BTW, I did ask All State about HO5 policy and the agent said they don't offer it, which I thought was odd. I didn't list the premium for the all All State combination because even though its homeowner's policy is price competitive with others, its auto policy was a whopping $1400 more than GEICO!
Best, | moi
talzara
Posts: 4745
Joined: Thu Feb 12, 2009 6:40 pm

Re: Home, auto, umbrella, earthquake insurance CA

Post by talzara »

moi wrote: Sat Dec 04, 2021 2:52 am 4. I’ve been told bey the GEICO sales agent that CEA earthquake policy is not as good as one sold be an insurance company. But the earthquake policy from an insurance company is about $800 more per year compared to CEA policy. He said CEA is underfunded and in a major disaster, the late claim filers will not get any payout when the funds run out. Not sure if that’s true or not.
The GEICO agent is correct. Homesite's earthquake insurance is underwritten by GeoVera, which has an AM Best rating of A. The CEA has an AM Best rating of A-, which is one notch lower.

Historically, A- rated insurers have experienced a 40-50% higher impairment rate than A rated insurers. GeoVera is also charging you 47% more than the CEA.

You can pick either policy, depending on your risk-tolerance. Selecting a lower-rated insurer would be accepting more risk on the high end. It's like selecting a higher deductible, which would be self-insuring more risk on the low end.
denovo wrote: Sat Dec 04, 2021 3:14 am Remember insurance salesmen are salesmen. CEA is the best for earthquake. They have been collecting premiums for over 20 years without a major earthquake. Other competitors are Johnny Come Latelies with smaller reserves. Here is what Fitch has to say.
The Fitch rating is a bond rating. The insurance industry relies on AM Best ratings.

As the AM Best rating shows, GeoVera has greater financial strength than the CEA. Its reserves are smaller because it has fewer policies. Its financial resources are larger relative to the risk.

You cited one paragraph from the Fitch rating, but the previous paragraph puts it in context. Fitch gave the CEA a rating of BBB, which is only an adequate rating. Fitch then increased the CEA's rating to A because of "financial flexibility." However, Fitch does not believe that the CEA is too big to fail. Its A rating is still lower than AA, which is the State of California's bond rating.
Fitch's risk assessment of the CEA's claims-paying resources is adequate (i.e. BBB category). ... Fitch believes the CEA's financial flexibility is much stronger than similarly rated private insurers that insure catastrophe risk, which allows its final rating to be elevated a full category above the risk assessment of claims paying resources, to 'A'. The state of California, the insurance industry in California and policyholders in California all have an interest in the CEA's continuance as an organization in Fitch's view.

https://www.fitchratings.com/research/i ... 12-10-2021
Mudpuppy
Posts: 7409
Joined: Sat Aug 27, 2011 2:26 am
Location: Sunny California

Re: Home, auto, umbrella, earthquake insurance CA

Post by Mudpuppy »

Just another data point to consider. According to an article in the Sacramento Bee, CEA is considering coverage changes to improve their fiscal footing and avoid excessive premium increases, but has not finalized any policy changes as of yet. The SacBee article also mentions that a 2.9% premium increase has already been approved for April 2022.

SacBee article: https://www.sacbee.com/news/california/ ... 33321.html
PDF with proposed coverage changes (starting on page 299): https://www.earthquakeauthority.com/EQA ... f?ext=.pdf

The CEA Board is scheduled to discuss it again at their board meeting this month. That meeting is happening on Thursday December 9th, and is open to the public if you're interested in such matters.

CEA Board website with links to meeting information: https://www.earthquakeauthority.com/Abo ... ning-Board

So it might be prudent to wait until after the CEA Board meeting on Thursday, should you have enough time to make your decisions. What I'm most interested in is the proposed reduction in personal property coverage, as that will mean having to take on a much larger self-insurance burden. It may be that CEA will still make the most sense after the changes, but it would still be good to wait a week to have the additional information in hand before making a decision.
scifilover
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Re: Home, auto, umbrella, earthquake insurance CA

Post by scifilover »

Absent from the discussion so far is the impact of Fire Following an EQ, which is an insured peril for all CA HO policies. Depending on the season and wind speed at the time of a large EQ, Fire Following has the potential to create much larger total losses for insurance companies than the damage caused by the EQ itself.

This is important because several of the layers of financing for the CEA are assessments on insurance companies who are participating in the CEA, in proportion to their CA HO market share. There are some potential scenarios in which one or more insurance companies who participate in the CEA might fail from Fire Following losses. This might create a cascade of company failures as the surviving companies see larger CEA assessments and California Insurance Guarantee Fund assessments. The CEA is a concept which is untested. There are various models which attempt to predict both EQ aggregate losses and Fire Following losses for a variety of events. However, it has been estimated that known fault lines represent only half of all fault lines. Additionally, the history which underpins the models is very limited compared to the time the San Andreas Fault has been around.

No one knows what will happen during and after a very large earthquake event in CA. For a fun read try this.....
https://en.wikipedia.org/wiki/1857_Fort ... earthquake
Mudpuppy
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Location: Sunny California

Re: Home, auto, umbrella, earthquake insurance CA

Post by Mudpuppy »

scifilover wrote: Sun Dec 05, 2021 8:17 am This is important because several of the layers of financing for the CEA are assessments on insurance companies who are participating in the CEA, in proportion to their CA HO market share.
Would that be related to the table of market share on page 207 of https://www.earthquakeauthority.com/EQA ... f?ext=.pdf?
scifilover
Posts: 543
Joined: Sun Apr 14, 2013 12:56 pm

Re: Home, auto, umbrella, earthquake insurance CA

Post by scifilover »

Mudpuppy wrote: Sun Dec 05, 2021 8:42 am
scifilover wrote: Sun Dec 05, 2021 8:17 am This is important because several of the layers of financing for the CEA are assessments on insurance companies who are participating in the CEA, in proportion to their CA HO market share.
Would that be related to the table of market share on page 207 of https://www.earthquakeauthority.com/EQA ... f?ext=.pdf?
Yes. And, as I read this CEA pub, they adjust the table every six months. As new companies enter the HO market, they must choose whether or not to participate in the CEA. They must offer EQ insurance to all their CA HO policyholders, either under their own name, or under the CEA. When the CEA began operations, there was more than the single layer of possible assessment which exists today.

Another interesting thought....the CEA has purchased reinsurance for some of their EQ exposure. Unfortunately, there is a finite amount of commercial insurance capacity in the world for re-insuring any event. Many of the companies in the CEA list of market participants have purchased catastrophe reinsurance to cover a portion of their exposure to Fire Following peril (possibly from the same re-insurance companies). Given the typical insurable value of CA homes, their contents, and Additional Living Expense, which are exposed to EQ and Fire Following, the possible amounts of total damage occurring in a major event( in excess of Moment Magnitude 8) is pretty spectacular. Unlike EQ as covered by the CEA with 10 and 15% deductibles, Fire Following is covered from normal policy deductibles which could be as low as $500. One of the models for Fire Following loss prediction speaks in terms of the destruction in multiples of 1000 Single Family Homes. Only the City of San Francisco has the equipment and capacity to temporarily replace EQ damaged water mains and thus provide water to fight fires after a major EQ. The level of damage that might occur is demonstrated by the 1991 Oakland Hills fire.,,,,https://en.wikipedia.org/wiki/Oakland_firestorm_of_1991
Topic Author
moi
Posts: 75
Joined: Fri Nov 04, 2016 1:33 am

Re: Home, auto, umbrella, earthquake insurance CA

Post by moi »

Mudpuppy wrote: Sun Dec 05, 2021 1:53 am Just another data point to consider. According to an article in the Sacramento Bee, CEA is considering coverage changes to improve their fiscal footing and avoid excessive premium increases, but has not finalized any policy changes as of yet. The SacBee article also mentions that a 2.9% premium increase has already been approved for April 2022.

SacBee article: https://www.sacbee.com/news/california/ ... 33321.html
PDF with proposed coverage changes (starting on page 299): https://www.earthquakeauthority.com/EQA ... f?ext=.pdf

The CEA Board is scheduled to discuss it again at their board meeting this month. That meeting is happening on Thursday December 9th, and is open to the public if you're interested in such matters.

CEA Board website with links to meeting information: https://www.earthquakeauthority.com/Abo ... ning-Board

So it might be prudent to wait until after the CEA Board meeting on Thursday, should you have enough time to make your decisions. What I'm most interested in is the proposed reduction in personal property coverage, as that will mean having to take on a much larger self-insurance burden. It may be that CEA will still make the most sense after the changes, but it would still be good to wait a week to have the additional information in hand before making a decision.

Hi Mudpuppy,

That's very interesting. I have time to wait until this Thursday.

Do you happen to be a California resident, and if so do you have earthquake insurance? And if so, did you go with CEA or another insurer?

Thank you
Best, | moi
phxjcc
Posts: 1329
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Re: Home, auto, umbrella, earthquake insurance CA

Post by phxjcc »

Look into Hartford.
Yes, you have to join you-know-who. :shock:

But, I have auto/liability/HO WITH EQ COVERAGE.
MY AGENT SAYS ITS THE BEST DEAL given the premium/deductible mix.

Caveat: my agent is also my roommate.

FWIW; I had Farmers' coverage on a home in the Northridge quake and they were excellent; mobilized claims people from all over the U.S. to come live in L.A. to process claims. As to the 10% deductible....um, the contractors were taking 90% of the estimated damages as full payment. $120,000 damages; in 1994 dollars. :moneybag
Mudpuppy
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Joined: Sat Aug 27, 2011 2:26 am
Location: Sunny California

Re: Home, auto, umbrella, earthquake insurance CA

Post by Mudpuppy »

moi wrote: Tue Dec 07, 2021 1:33 am Do you happen to be a California resident, and if so do you have earthquake insurance? And if so, did you go with CEA or another insurer?
Yes, to both. I'm a California resident and I currently have CEA insurance. My policy renews in February, so we'll see how the December board meeting goes. The proposed near elimination of personal property coverage concerns me, particularly if HO insurance also won't cover those losses. I'll have to read my policies more carefully.
talzara
Posts: 4745
Joined: Thu Feb 12, 2009 6:40 pm

Re: Home, auto, umbrella, earthquake insurance CA

Post by talzara »

scifilover wrote: Sun Dec 05, 2021 8:17 am Absent from the discussion so far is the impact of Fire Following an EQ, which is an insured peril for all CA HO policies. Depending on the season and wind speed at the time of a large EQ, Fire Following has the potential to create much larger total losses for insurance companies than the damage caused by the EQ itself.
The 1906 San Francisco earthquake bankrupted a dozen insurance companies, all of them because of fire following earthquake. Insurers paid an average of 77 cents on the dollar, although some claims were paid in full and others took a larger haircut: https://www.iii.org/article/san-francis ... erspective
talzara
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Re: Home, auto, umbrella, earthquake insurance CA

Post by talzara »

scifilover wrote: Mon Dec 06, 2021 6:48 am Another interesting thought....the CEA has purchased reinsurance for some of their EQ exposure. Unfortunately, there is a finite amount of commercial insurance capacity in the world for re-insuring any event. Many of the companies in the CEA list of market participants have purchased catastrophe reinsurance to cover a portion of their exposure to Fire Following peril (possibly from the same re-insurance companies).
CAT bonds are safer than reinsurance. Instead of a single reinsurer signing treaties with multiple insurers, there is a single insurer issuing bonds to multiple investors. The money is also kept by the insurance company, not by the reinsurer. If a catastrophe hits, the insurance company will simply trigger the CAT bonds, and the investors will lose their principal.

However, these features also make CAT bonds more expensive than traditional reinsurance. In July 2021, the CEA had only 24% of its reinsurance in the form of CAT bonds:
Then, at reinsurance renewals so far in 2021, the CEA has renewed a significant amount of limit and added a little more, including new placements at the January, April, June and July renewals, taking its total risk transfer program back around its record size at $9.6 billion.

Of that, just over $2.3 billion was provided by catastrophe bonds and $7.3 billion by traditional reinsurance at the end of July, some of the traditional component of which is likely collateralized or fronted on behalf of players from the ILS market.

https://www.artemis.bm/news/ceas-risk-t ... s-certain/
talzara
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Joined: Thu Feb 12, 2009 6:40 pm

Re: Home, auto, umbrella, earthquake insurance CA

Post by talzara »

scifilover wrote: Mon Dec 06, 2021 6:48 amOnly the City of San Francisco has the equipment and capacity to temporarily replace EQ damaged water mains and thus provide water to fight fires after a major EQ.
I don't know if San Francisco can replace its water mains quickly after an earthquake.

San Francisco has a second water system, but it's in poor condition because it's only for use in emergencies.
In 1906, the 7.8-magnitude quake did some serious damage on its own, but the fires it created wreaked the worst havoc. To ensure that high-pressure water would be available after another temblor, San Francisco built what remains the only backup water system in any U.S. city.

However, much of the 1913 system’s infrastructure is weak and outdated. After the Loma Prieta quake in 1989, the auxiliary water supply system failed in the Marina District. According to an October story in the Chronicle, published 26 years after that dire warning, less than 50 percent of the system would be reliable after another earthquake.

https://www.sfweekly.com/news/how-relia ... -not-very/
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