California Code of Regulations
Title 10 - Investment
Chapter 5 - Insurance Commissioner
Subchapter 7.7 - California Earthquake Authority
Section 2697.6 - Earthquake Policies, Coverage Types and Limits
Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) The Authority must offer, in accordance with the provisions of Division 2, Part 1, Chapter 8.5, of the Insurance Code, a basic residential earthquake insurance policy to any owner of a qualifying residential property, as long as the qualifying residential property meets the eligibility standards of the Authority and the owner has first secured a residential property insurance policy from a participating insurer.
(b) The Authority must renew any basic residential earthquake insurance policy it has written, provided that the Authority receives payment of the applicable renewal premium on or before the expiration date stated in the policy. The Authority must nonrenew, rescind, or cancel a policy on any otherwise qualified residential property whenever the property is no longer covered by an underlying residential property insurance policy issued by a participating insurer.
(c) No policy issued by the Authority will provide coverage in the event there is no underlying residential property insurance policy issued by a Participating Insurer at the time of loss. In that case, any unearned premium shall be returned to the policyholder on a pro rata basis.
(d) The types of policies, base-limits policy coverage limits, and base-limits policy deductibles of Authority policies shall be as follows:
| Coverage A (Dwelling) | Limit of insurance equal to the stated Coverage A limit (however the limit on liability for the structure may be denominated in the residential property insurance policy, without adjustment of the stated dollar amount for inflation or similar modification) of underlying residential property insurance policy; maximum deductible 15% of Coverage A limit | |
| Coverage B | Limited coverage, included in Coverage A limit and subject to Coverage A deductible | |
| Coverage C (Personal Property/Contents) | No less than $5,000 limit of insurance; no payment unless structural loss meets Coverage A deductible | |
| Coverage D (Loss of Use) | No less than $1,500 limit of insurance; no deductible | |
| Limited Building Code Upgrade | No less than $10,000 limit of insurance, subject to Coverage A deductible |
| Coverage A (Real Property) | No less than $25,000 limited of insurance; maximum deductible 15% of Coverage A limit; plus no less than $10,000 Limited Building Code Upgrade coverage as additional insurance, subject to Coverage A deductible | |
| Coverage C (Personal Property/Contents) | No less than $5,000 limit of insurance; maximum deductible 15% of Coverage C limit | |
| Coverage D (Loss of Use) | No less than $1,500 limit of coverage; no deductible | |
| Coverage E (Loss Assessment) | For condominium units valued at $135,000 or more, no less than $50,000 limit of coverage; for condominium units valued at less than $135,000, no less than $25,000 limit of coverage; maximum deductible 15% of Coverage E limit |
| Coverage C (Personal Property) | No less than $5,000 limit of insurance; maximum deductible 15% of Coverage C limit | |
| Coverage D (Loss of Use) | No less than $1,500 limit of insurance; no deductible |
(e) The Authority may issue basic residential earthquake insurance policies with limits of insurance greater than the required minimum limits of insurance set forth in subdivision (d) or with lower deductibles than the maximum deductibles set forth in subdivision (d), referred to in this Chapter as "optional limits basic residential earthquake insurance." In issuing its optional-limits basic residential earthquake insurance policies, the Authority must provide full financial backing in accordance with a written plan of finance. The plan of finance may include the purchase by the Authority of reinsurance and financial guaranty insurance on terms and at the limits that the Authority may find reasonable and appropriate, to secure the payment of claims obligations and expenses that may arise under its optional-limits basic residential earthquake insurance policies.
(f) With respect to individual condominium unit policies, the value of the land on which a condominium unit is constructed is to be excluded when determining the value of that condominium unit for the purpose of determining the minimum limit of insurance for Coverage E (Loss Assessment).
1. New section
filed 11-18-96 as an emergency; operative 11-18-96 (Register 96, No. 47). A
Certificate of Compliance must be transmitted to OAL by 3-18-97 or emergency
language will be repealed by operation of law on the following day.
2.
Repealed by operation of Government Code section
11346.1(g)
(Register 97, No. 14).
3. New section filed 4-1-97 as an emergency;
operative 4-1-97 (Register 97, No. 14). A Certificate of Compliance must be
transmitted to OAL by 7-30-97 or emergency language will be repealed by operation of
law on the following day.
4. Repealed by operation of Government Code
section
11346.1(g)
(Register 97, No. 32).
5. New section filed 8-4-97 as an emergency;
operative 8-4-97 (Register 97, No. 32). A Certificate of Compliance must be
transmitted to OAL by 12-2-97 or emergency language will be repealed by operation of
law on the following day.
6. Certificate of Compliance as to 8-4-97 order
transmitted to OAL 11-26-97 and filed 1-13-98 (Register 98, No. 3).
7.
Amendment of section and NOTE filed 5-11-99; operative 6-10-99 (Register 99, No.
20).
8. Amendment of subsections (d) and (e) filed 3-9-2006 as an
emergency; operative 3-9-2006 (Register 2006, No. 10). A Certificate of Compliance
must be transmitted to OAL by 7-7-2006 or emergency language will be repealed by
operation of law on the following day.
9. Certificate of Compliance as to
3-9-2006 order transmitted to OAL 6-13-2006 and filed 7-12-2006 (Register 2006, No.
28).
10. Amendment of subsection (e) filed 11-15-2006 as an emergency;
operative 11-15-2006 (Register 2006, No. 46). A Certificate of Compliance must be
transmitted to OAL by 3-15-2007 or emergency language will be repealed by operation
of law on the following day.
11. Certificate of Compliance as to
11-15-2006 order, including further amendment of subsection (e), transmitted to OAL
3-15-2007 and filed 4-25-2007 (Register 2007, No. 17).
12. Amendment
filed 4-30-2008; operative 5-30-2008 (Register 2008, No.
18).
Note: Authority cited: Sections 10087, 10089.5(c), 10089.11, 10089.20 and 10089.26(a)(1), Insurance Code. Reference: Sections 10089, 10089.11(a), 10089.28(b) and 12921, Insurance Code.
