Quake Insurance Rates and Coverage

As a retired person, my most valuable investment is the home where I have lived for 25 years. During that time I have done everything I can to protect my home, including purchasing earthquake insurance. However, because of the intervention of the state of California, I now find that my ability to continue this prudent practice has been severely limited.

I have received an offer from the California Earthquake Authority to insure my home against earthquake damage for the forthcoming year. This offer, which includes a maximum of $5,000 coverage for personal property, provides well less than half of the coverage I previously had at 99% of the cost.

It is bad enough that this is an appallingly inadequate offer at a grossly inflated price. However, what makes the situation most disturbing is the fact that the legislation that created the CEA has also effectively removed any competition from the marketplace. This is the kind of legislation I would expect in a socialist state, but not in the market economy of the U.S.

FRED L. HEAD

Hacienda Heights

* I’ve just received my earthquake “insurance” policy. The policy states: “This policy is not covered by the California Insurance Guaranty Assn. Therefore the California Insurance Guaranty Assn. will not pay your claims or protect your assets if the CEA becomes insolvent and is unable to make payments as promised. . . . In addition to the annual premium you may be charged up to an additional 20% of the premium.”

If I understand this correctly, the already exorbitant amount I’m being charged for minimal coverage may be raised another 20% at the whim of the insurers, who in any event have already raised the specter of possible insolvency which would preclude their paying any claims. What exactly are purchasers of earthquake insurance paying for? And how are insurance companies allowed to collect premiums for an insurance risk they indicate they stand ready to disavow should any serious disaster occur?

MICHAEL LAURENCE

Sherman Oaks