Senators Dianne Feinstein and Barbara Boxer, Democrats from California, have proposed federal legislation to make earthquake insurance more affordable for Californians via a non-profit, state-administered program.
The Earthquake Insurance Affordability Act would allow non-profit insurance programs like the California Earthquake Authority to access federal loan guarantees and empower them to lower rates to consumers in anticipation of the next major earthquake.
Sen. Feinstein said, “The tragedy and devastation of the recent earthquake in Japan was a real wake-up call. We cannot prevent an earthquake, but we must do everything we can to prepare for one by ensuring homeowners have access to affordable earthquake insurance coverage. This legislation will allow homeowners to get back on their feet and recover more quickly in the event of a significant earthquake.”
Boxer added, “I am proud to join with Senator Feinstein to introduce legislation that would help homeowners in California access affordable earthquake insurance, which is critical to helping residents and communities recover and rebuild after the devastation of an earthquake.”
During the first five years this legislation would be in effect, approximately one billion dollars in reinsurance costs would be saved and premiums could be cut by 30 percent or deductibles by 50 percent. Approximately 700,000 more California homeowners would be able to carry earthquake coverage as a result.
The complete cost of the loan guarantees and program administration would fall to participating state programs and would not be an expense born by federal tax payers.