CEA policies come with a required disclosure under §10089.28(b), because they work differently from an ordinary homeowners policy. Know its warnings.
The disclosure tells the policyholder:
The policy is not covered by the California Insurance Guarantee Association (CIGA). If the CEA becomes insolvent, CIGA will not pay its claims.
If the CEA's liability exceeds its available resources, it may reduce payments or pay in installments.
The CEA is not part of the policyholder's homeowners insurer, and its coverages differ from those of the homeowners policy.
Surcharge risk: if the CEA's obligations to pay earthquake losses rise to the level that triggers it, a policyholder may be charged up to an additional 20% of the annual premium. On a $1,400 annual premium, the most extra is $280. An ordinary homeowners policy carries no such assessment-like risk.