The CEA, or California Earthquake Authority, is a state-sponsored pooled risk entity that was started after commercial carriers pulled out of the earthquake insurance market in California. I'm always suspicious when a government entity is created to take over a product that commercial entities decided was unprofitable, and the claims-paying ability of the CEA in a catastrophic earthquake has been questioned since it was created. I had no idea any commercial carriers would underwrite earthquake policies here until "iwannaretire" mentioned Geovera.
The cost of the insurance is location-dependent, similar to flood and fire insurance. My homeowner's policy assumes a replacement cost of around $267 per square foot. No marble bathrooms or granite countertops included at this level, just a mid-range tract house. The CEA policy uses the replacement cost in the underlying homeowner's policy. The policy cost for the standard CEA policy with a 15 percent deductible (what I think you call excess) is $1,131. That's about 0.17 percent of what State Farm calculated as replacement cost.
The standard policy for my house has a deductible of approximately $100,000. My house was built in 1989, so the wood frame structure is bolted to the concrete perimeter foundation and there are no cripple walls. In a major earthquake, I would expect to lose both masonry fireplaces and suffer additional damage to the structure as the result of their collapse. Broken windows, sheet rock damage, and possible plumbing and gas leaks may occur. As an aside, if the house is structurally sound after the earthquake but burns down because of an accidental gas fire, the loss is supposedly covered by the fire insurance.
Even with a massive increase in contractor prices after a major quake (I saw a lot of shortages and price gouging locally after the Oakland Hills fire in 1991 and I experienced it in Arizona replacing a roof that was damaged in a widespread hail storm), it would be tough to spend much more than $100,000 fixing these items and the extra cost would probably be worth self-insuring given the high deductible. My bet is the government would suddenly be in the low cost construction loan business after the event, and I would take advantage if it were offered.
The insurance available is not really for the major quake, it's for the catastrophic quake that badly damages or destroys the structure. The 8.5 magnitude quake on the San Andreas fault we know is coming some time in the next 50 years or some nasty seismic wave amplification from a lesser but shallower quake on the San Andreas or Hayward fault. Paying $1,131 annually for a promised pay out if the structure is badly damaged or destroyed is what I'm really debating.
Thoughts?