What You Might Not Know About Earthquake Insurance
During the recent American Agents Alliance industry conference and tradeshow, our CEO, John Forney, was invited to speak as a recognized industry thought leader.
Educate Homeowners on Earthquake Insurance
As a member of the keynote panel, John was asked the question, “What is one thing about the earthquake insurance market that most people don’t know?”
In response, he discussed his own experience in purchasing insurance for a home in California:
The Critical Gap in Homeowners Insurance
JF: “What most agents don’t know about earthquake insurance is that at least 50% of your customers don’t know that their homeowners insurance doesn’t cover earthquake, and they’re going to come looking for you after they have a loss!
Think I’m exaggerating? No way. If anything, I’m understating the extent of the problem. As anecdotal evidence, My experience as a first-time CA homebuyer in July 2020 (and by the way, my home was in a neighborhood in South Napa that suffered damage during the 2014 earthquake):
My insurance agent did not know I worked for an earthquake insurance company. She never mentioned the word earthquake during the process that led to my purchase of a Nationwide HO3 policy, nor did she tell me that that policy did not cover losses from earthquakes. Thirty days later I received the CEA mandatory offer (15% deductible, $5000 contents coverage). Because of my job, I knew what it was, but for the uninitiated homeowner I’m sure it looks like junk mail and is routinely discarded. I bought a GeoVera policy, of course!”
Homeowners need to be informed of the basic premise John presented, which is that they have a critical gap in their insurance if they live in a seismic region with only a homeowners policy. A stand alone earthquake policy may cover damage sustained by the dwelling, other structures and personal property, plus loss of use, potential loss assessment and costs associated with changing building codes. The financial impact from a natural disaster can quickly add up. Without the right insurance in place, families need to know that they could lose their largest asset.
Are You Having the Earthquake Insurance Conversation?
John informally polls agents in order to delve into how consistently (or not) earthquake insurance is being sold by insurance agents at the time a homeowners policy is written:
JF: “Since I became CEO of GeoVera we have hosted at least seven agents’ roundtables/dinners to understand better the dynamics of the retail market for earthquake insurance and to thank agents for doing business with us. At each one I ask for a show of hands for every agent that offers earthquake insurance to every HO3 customer. Consistently, only about 1/3 of the hands go up!”
Why Sell GeoVera Earthquake Insurance?
Aside from protecting insureds from devastating losses, agents should consider the risk of not having a conversation about earthquake insurance with each client. Offering earthquake insurance limits your exposure since your clients need to know that they are not covered for earthquake damage under the homeowners policy.
Why Sell GeoVera? According to John.
- Strongest financial strength rating of any carrier writing residential earthquake insurance in California: “A” (Excellent) from AM Best. Reaffirmed in July 2023.
- Longest-tenured writer of standalone residential earthquake insurance in California: first policy 1995, before the CEA was created.
- Only major residential earthquake provider with an internal CAT claims department – and ALL our adjusters are CEA-certified.
- Best-in-class underwriting: our Chief Underwriting Officer has a Ph.D. from Stanford in Civil Engineering with a concentration in Earthquake Engineering. This subject matter expertise means each risk is evaluated and priced correctly.
- Most product flexibility: our combined single limit “Cadillac” product is unique in the industry – no one else offers it. We augment this with offerings of flex-limit products at a much more affordable price point and with maximum coverage flexibility.
Is Earthquake Insurance Worth It?
Many homeowners think an earthquake will never hit their neighborhood; until it does. A policy from GeoVera will help them to rebuild quickly, provide additional living expenses, and protect their broader financial stability.
Don’t wait for disaster to strike; visit mygeosource.com to begin safeguarding your clients against earthquakes.
We look forward to partnering with your agency to build your book of this high value business.