§ 2697.6. Earthquake Policies, Coverage Types and Limits.

(a) The Authority must offer, in accordance with the provisions of Division 2, Part 1, Chapter 8.5, of the Insurance Code, a basic residential earthquake insurance policy to any owner of a qualifying residential property, as long as the qualifying residential property meets the eligibility standards of the Authority and the owner has first secured a residential property insurance policy from a participating insurer.

(b) The Authority must renew any basic residential earthquake insurance policy it has written, provided that the Authority receives payment of the applicable renewal premium on or before the expiration date stated in the policy. The Authority must nonrenew, rescind, or cancel a policy on any otherwise qualified residential property whenever the property is no longer covered by an underlying residential property insurance policy issued by a participating insurer.

(c) No policy issued by the Authority will provide coverage in the event there is no underlying residential property insurance policy issued by a Participating Insurer at the time of loss. In that case, any unearned premium shall be returned to the policyholder on a pro rata basis.

(d) The types of policies, base-limits policy coverage limits, and base-limits policy deductibles of Authority policies shall be as follows:

1. Dwelling policy:
Coverage A (Dwelling)	Limit of insurance
	equal to the stated
	Coverage A limit
	(however the
	limit on liability
	for the structure
	may be
	denominated in
	the residential
	property insurance
	policy, without
	adjustment of the
	stated dollar
	amount for
	inflation or similar
	modification) of
	underlying
	residential
	property insurance
	policy; maximum
	deductible 15% of
	Coverage A limit
Coverage B	Limited coverage,
	included in
	Coverage A limit
	and subject to
	Coverage A
	deductible
Coverage C (Personal Property/Contents)	No less than
	$5,000 limit of
	insurance; no
	payment unless
	structural loss
	meets Coverage
	A deductible
Coverage D (Loss of Use)	No less than
	$1,500 limit of
	insurance; no
	deductible
Limited Building Code Upgrade	No less than
	$10,000 limit of
	insurance, subject
	to Coverage A
	deductible
2. Individual condominium or cooperative unit policy:
Coverage A (Real Property)	No less than
	$25,000 limited of
	insurance;
	maximum
	deductible 15% of
	Coverage A limit;
	plus no less than
	$10,000 Limited
	Building Code
	Upgrade coverage
	as additional
	insurance, subject
	to Coverage A
	deductible
Coverage C (Personal Property/Contents)	No less than
	$5,000 limit of
	insurance;
	maximum
	deductible 15% of
	Coverage C limit
Coverage D (Loss of Use)	No less than
	$1,500 limit of
	coverage; no
	deductible
Coverage E (Loss Assessment)	For condominium
	units valued at
	$135,000 or more,
	no less than
	$50,000 limit of
	coverage; for
	condominium
	units valued at less
	than $135,000, no
	less than $25,000
	limit of coverage;
	maximum
	deductible 15% of
	Coverage E limit
3. Renter's policy:
Coverage C (Personal Property)	No less than
	$5,000 limit of
	insurance;
	maximum
	deductible 15% of
	Coverage C limit
Coverage D (Loss of Use)	No less than
	$1,500 limit of
	insurance; no
	deductible

(e) The Authority may issue basic residential earthquake insurance policies with limits of insurance greater than the required minimum limits of insurance set forth in subdivision (d) or with lower deductibles than the maximum deductibles set forth in subdivision (d), referred to in this Chapter as “optional limits basic residential earthquake insurance.” In issuing its optional-limits basic residential earthquake insurance policies, the Authority must provide full financial backing in accordance with a written plan of finance. The plan of finance may include the purchase by the Authority of reinsurance and financial guaranty insurance on terms and at the limits that the Authority may find reasonable and appropriate, to secure the payment of claims obligations and expenses that may arise under its optional-limits basic residential earthquake insurance policies.

(f) With respect to individual condominium unit policies, the value of the land on which a condominium unit is constructed is to be excluded when determining the value of that condominium unit for the purpose of determining the minimum limit of insurance for Coverage E (Loss Assessment).

HISTORY

1. New section filed 11-18-96 as an emergency; operative 11-18-96 (Register 96, No. 47). A Certificate of Compliance must be transmitted to OAL by 3-18-97 or emergency language will be repealed by operation of law on the following day.

2. Repealed by operation of Government Code section 11346.1(g) (Register 97, No. 14).

3. New section filed 4-1-97 as an emergency; operative 4-1-97 (Register 97, No. 14). A Certificate of Compliance must be transmitted to OAL by 7-30-97 or emergency language will be repealed by operation of law on the following day.

4. Repealed by operation of Government Code section 11346.1(g) (Register 97, No. 32).

5. New section filed 8-4-97 as an emergency; operative 8-4-97 (Register 97, No. 32). A Certificate of Compliance must be transmitted to OAL by 12-2-97 or emergency language will be repealed by operation of law on the following day.

6. Certificate of Compliance as to 8-4-97 order transmitted to OAL 11-26-97 and filed 1-13-98 (Register 98, No. 3).

7. Amendment of section and Note filed 5-11-99; operative 6-10-99 (Register 99, No. 20).

8. Amendment of subsections (d) and (e) filed 3-9-2006 as an emergency; operative 3-9-2006 (Register 2006, No. 10). A Certificate of Compliance must be transmitted to OAL by 7-7-2006 or emergency language will be repealed by operation of law on the following day.

9. Certificate of Compliance as to 3-9-2006 order transmitted to OAL 6-13-2006 and filed 7-12-2006 (Register 2006, No. 28).

10. Amendment of subsection (e) filed 11-15-2006 as an emergency; operative 11-15-2006 (Register 2006, No. 46). A Certificate of Compliance must be transmitted to OAL by 3-15-2007 or emergency language will be repealed by operation of law on the following day.

11. Certificate of Compliance as to 11-15-2006 order, including further amendment of subsection (e), transmitted to OAL 3-15-2007 and filed 4-25-2007 (Register 2007, No. 17).

12. Amendment filed 4-30-2008; operative 5-30-2008 (Register 2008, No. 18).

Note

Note: Authority cited: Sections 10087, 10089.5(c), 10089.11, 10089.20 and 10089.26(a)(1), Insurance Code. Reference: Sections 10089, 10089.11(a), 10089.28(b) and 12921, Insurance Code.