California Department of Insurance Approves Major Rate Reductions for Top Earthquake Insurance Carriers
News: 2012 Press Release
SACRAMENTO - Insurance Commissioner Dave Jones has approved rate reductions for two of California's largest earthquake insurers. CHUBB Insurance agreed to a 15.46 percent rate decrease and Chartis is lowering its rates by 15 percent for an overall savings to consumers of nearly $15 million. The average annual premium for CHUBB's nearly 7,000 policyholders will go from $5,940 to $5,021, while Chartis' will drop from $7292 to $6061.
The premium reductions are based on updates to models used to develop earthquake insurance rates which show lower damage estimates. As a result of the new data, the California Department of Insurance sent letters to earthquake insurers asking them to substantiate current rates or make reductions. The California Earthquake Authority, the largest writer of earthquake insurance, decreased its rates by 12.5 percent earlier this year.
Only 12 percent of California homeowners have earthquake insurance. "We live in earthquake country and the danger is real. Anything we can do to make coverage more affordable for consumers is a good thing," said Commissioner Jones. "It is important for homeowners to make an educated decision about whether earthquake insurance is the best way to protect their most important asset-their home. Retrofitting the home is another important and often cost effective option to consider."
Rates are based on a number of factors, including: the year the home was built; construction type; the distance to a fault line; and seismic and soil studies. Homeowner insurers are obligated to send out offers of earthquake coverage every other year with policy renewals.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California, regulating the $123 billion insurance marketplace. In 2013 the California Department of Insurance received more than 170,000 calls from consumers and helped recover over $63 million in claims and premiums. Please visit the Department of Insurance web site at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.HELP or 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.