Guides
The California Earthquake Authority explained
What the CEA is, how its policies are sold through your home insurer, what they cover and exclude, how it is funded, and what its limits mean for homeowners.
The California Earthquake Authority (CEA) is a not-for-profit, publicly managed, privately funded insurer that the California Legislature created to sell basic residential earthquake policies. You cannot buy from it directly: its policies are sold and serviced only by participating homeowners insurers, and you need a residential policy with the same company. At the end of 2025 it had 968,479 policies in force, and it describes itself as holding almost 61% of California's residential earthquake market.
Why it exists
On January 17, 1994, a magnitude 6.7 earthquake struck Northridge in the San Fernando Valley, on a fault no one knew was there. The Seismic Safety Commission estimated about $20 billion in residential damage, only half of it insured, according to CEA's own history. The insurance industry paid more in claims for that quake than it had collected in earthquake premiums over the previous 30 years, according to the Insurance Information Institute.
California law required, and still requires, insurers that write homeowners policies to offer earthquake coverage. So when insurers tried to shed their earthquake exposure, the practical way to do it was to stop selling homeowners policies. CEA's 2025 report to the Legislature says the California Department of Insurance reported in summer 1996 that 95% of the homeowners market had stopped or severely restricted new sales. The Legislature created a basic policy in 1995 and the CEA in 1996; the CEA began operating on December 2, 1996. Per the same report, 82 insurers had restricted new homeowners sales at the peak of the crisis, and by October 1997 only three did.
How it works
- Sold through your homeowners insurer. Each participating insurer sells the policy, collects the premium and handles claims for CEA. CEA's participating list includes Allstate, Farmers Insurance, State Farm, Liberty Mutual, Mercury Insurance, Nationwide, USAA and the California FAIR Plan, among others; check CEA's current list.
- Requires a companion policy. The CEA policy states that you must keep a companion fire or homeowners policy in force with the same participating insurer, and that if none is in effect at the time of loss, the earthquake policy is void. If your homeowners insurer nonrenews you, your CEA coverage ends with that policy, and you would need a new policy from another participating insurer.
- Open to nearly anyone eligible. CEA's report describes it as a take-all-comers insurer for any customer with a residential policy from a participating insurer, provided there is no unrepaired structural earthquake damage at the property.
- Governed by a public board. The Governor, the State Treasurer and the Insurance Commissioner hold the voting seats, and the Assembly Speaker and the chair of the Senate Rules Committee sit as non-voting members, under Insurance Code section 10089.7.
- Priced under state rules. By statute, rates must be actuarially sound and consider location, soil, construction, age and hazard-reduction features. CEA uses 23 rating territories by ZIP code. The Department of Insurance must approve rate changes; it approved an average statewide increase of 6.8% on June 6, 2025.
If you have no homeowners policy with a participating insurer, other earthquake insurers exist. CEA's own list of alternatives names GeoVera (GeoVera Insurance) and Palomar and says it has no affiliation with them. The California Department of Insurance says stand-alone policies of that kind do not require homeowners coverage with the same company.
What the policy covers
CEA sells two homeowners forms. Standard Homeowners puts everything under one deductible. Homeowners Choice allows separate dwelling and contents deductibles and lets you buy dwelling-only coverage. According to CEA's coverage page:
| Coverage | Terms |
|---|---|
| Dwelling and extensions | Deductible of 5%, 10%, 15%, 20% or 25% of the combined limit, which must match your homeowners dwelling limit |
| Personal property | $5,000 or $25,000; $500 for breakable items |
| Loss of use | No deductible; limits from $1,500 up to $100,000 |
| Emergency repairs | First $1,500 with no deductible |
| Building code upgrade | $10,000 included; $20,000 or $30,000 available |
The 5% and 10% deductible options are not available if the dwelling limit is above $1 million, or for frame homes built before 1980 that are not on a slab foundation and lack a verified retrofit. The policy does not provide extended or guaranteed replacement cost, so if rebuilding costs more than the limit, you pay the difference, and the exclusions are real. The January 2026 sample policy (form BEQ-3B) excludes swimming pools and spas, exterior masonry veneer, landscaping, fences, and detached structures except as specifically provided. It also limits chimneys to $10,000 and earthquake-caused mold to $5,000. earthquake insurance explained walks through the full list, and the earth movement exclusion explained explains why your homeowners policy leaves these losses out.
In 2023, CEA cut some optional coverages to hold down rates. According to its 2025 report, contents limits were reduced from a $200,000 maximum to $25,000, the options for decorative masonry veneer and breakables were eliminated (a $500 breakables sublimit was added in 2025), and the 5% and 10% deductibles were removed for homes over $1 million and for unretrofitted pre-1980 homes. State law requires insurers to offer only a basic policy with a 15% deductible and minimum limits, according to CEA's report and the Department of Insurance; CEA's 5% and 10% options go beyond that minimum. The reasons deductibles run so high are in earthquake deductibles: why they're so high.
How it is funded
CEA is funded by policyholder premiums, which were about $900 million a year according to its website, with only 6% of premium income allowed for operating expenses by law. Its claim-paying capacity is built in layers that include accumulated capital, reinsurance and capital-markets risk transfer, revenue bonds, and an assessment on participating insurers. Claim-paying capacity was about $19.9 billion at June 30, 2026, which KBRA equates to a 1-in-390-year modeled event, in a September 10, 2026 release affirming an A+ rating on CEA's Series 2022A revenue bonds. AM Best affirmed CEA's Financial Strength Rating of B++ (Good) on April 14, 2026, according to the annual report.
Those numbers describe a large but finite fund, and the policy tells you so. The policy says that if available capital may be exhausted, CEA may pay claims on a pro-rata basis or in installments under a plan presented to the Insurance Commissioner. It says the insurer may impose a surcharge of up to 20% of your annual premium after an earthquake that exhausts claim-paying capacity. And it quotes Insurance Code section 10089.25(d): the State of California has no liability for claims beyond funds available. KBRA noted that the current statutory framework does not provide a clearly defined way to recapitalize CEA after an event that impairs its capital, and that its claims, vendor and operating arrangements remain untested at major-event scale. A large quake could reduce capacity for the next one.
The case for and against
For. CEA created a standard product with state-approved language and a route to buy it from the insurer you already use. The market that existed after Northridge, where insurers walked away from homeowners policies, recovered after it began operating. It funds retrofit programs and offers premium discounts of up to 25% for verified retrofits of qualifying older homes.
Against. The policy is deliberately basic. The deductible is a percentage of the full dwelling limit and reaches $60,000 on a $400,000 limit at 15%; contents coverage tops out at $25,000; pools, veneers and detached buildings are excluded; and there is no extended replacement cost. Take-up is modest. In 2025, 15.24% of California homeowners policies carried earthquake coverage, and 12.48% of all residential policies, per the Department of Insurance data in CEA's report. The companion-policy requirement also ties your earthquake coverage to an insurer that may leave the market.
Market shifts that affect it
CEA's participating insurers wrote 68.5% of California residential property insurance in 2025, down from a peak of 80.6% in 2015. Between 2023 and 2025, their residential policy counts fell by 974,357 while non-participating insurers' counts grew by 946,562. Many larger insurers restricted or stopped writing new homeowners policies in that period, and CEA says this has held back its own growth, because a CEA policy can only be offered with an underlying participating-insurer policy. Dwelling fire policies, a quarter of which are written by the FAIR Plan, have an earthquake take-up of 2.91%.
Retrofit and mitigation
CEA and the California Governor's Office of Emergency Services run the California Residential Mitigation Program. Its Earthquake Brace + Bolt program gives eligible homeowners up to $3,000 toward bolting a house to its foundation and bracing the crawlspace, with income-based supplemental grants, and more than 35,000 retrofits had been completed by the end of 2025. A soft-story program pays up to 70% of the cost, to a maximum of $13,000, for houses with living space over a garage in listed ZIP codes. After a verified retrofit, you submit paperwork to your insurer for a hazard-reduction discount of up to 25% on the CEA premium.
What to do
- Read your written offer. California insurers must offer earthquake coverage in writing at least every other year, and the California Department of Insurance says that not replying is a rejection.
- Ask your agent which deductibles your home qualifies for and what each costs. Then see the arithmetic in earthquake deductibles: why they're so high.
- Compare Standard and Choice, and decide whether you need contents coverage.
- Check your homeowners insurer's status. If it has nonrenewed or restricted business, ask what happens to your CEA policy.
- Ask about retrofit grants and the discount if you own a pre-1980 wood-frame house on a raised foundation.
Key takeaways
- The CEA is a state-created, privately funded insurer that sells only through participating homeowners insurers; you cannot buy from it directly.
- A CEA policy requires a companion homeowners or fire policy with the same insurer, so losing that policy ends your earthquake coverage.
- The coverage is basic: percentage deductibles of 5% to 25%, $5,000 or $25,000 of contents, $10,000 of code-upgrade coverage, and exclusions for pools, veneers, fences and detached structures.
- Claim-paying capacity was about $19.9 billion at June 30, 2026, but the policy allows pro-rata payment and surcharges if a quake exhausts it, and the state does not back claims.
- Retrofitting can cut your premium by up to 25% and may qualify you for grants of up to $3,000.