Earthquake Facts and Fictions

Most property insurance professionals have a better than general idea about the basic rules that apply to earthquake claims in California. But, there’s also a good bit of urban legend. This post aims to reinforce in under 275 words what claims professionals already know and bust a few myths.

1.        The Efficient Proximate Cause Rules are Different for Earthquake.

California Insurance Code § 10088 provides the efficient proximate causation doctrine doesn’t apply to damage for which earthquake is the proximate cause, unless of course the policy provides it does cover earthquake.

2.        If there is a Resulting Fire Following an Earthquake, the Fire Damage Is Probably Covered.

California Insurance Code § 10088.5 provides Section 10088 does not exempt an insurer from its obligations under a fire insurance policy to “cover the losses of a fire which is caused by or follows an earthquake.”

3.        All Personal Lines Earthquake Coverage is not Provided by the California Earthquake Authority.

While the CEA has the Lion’s share of the residential earthquake market, there are several private insurers who also sell stand-alone residential earthquake policies. And, a number of insurers who issue homeowners policies also issue earthquake policies.

4.        CEA Adjuster Certification is Not Required to Adjust Earthquake Claims for Other Insurers.

The CEA has an excellent adjuster certification program. While other insurers can require their adjusters to obtain that certification, it’s not mandatory for adjusters not handling claims on behalf of the CEA (all CEA claims are handled by the claims staff of the participating homeowners insurer.