Derek
June 26, 2026
California earthquake deductibles run 5% to 25% of your home's rebuild cost, not a flat amount. Learn how the CEA percentage rule works and how to manage the exposure.
Written by Mark Lopez
For those who have only had a traditional homeowners insurance policy, earthquake insurance in California will seem very different. Gone is the customary deductible of $1,000 or $2,500. In its place is a percentage of the total amount to reconstruct your house, a figure anywhere between 5% and 25%. Why is the percentage structure so important? For instance, for a house worth $800,000, a 15% deductible means paying the first $120,000 in damages out of pocket.
In California, most home insurance policies do not provide coverage for earthquakes. You need to buy earthquake insurance if you want coverage for your property. Approximately 70% of all earthquake insurance in California is issued by the California Earthquake Authority (CEA). This organisation is nonprofit and publicly owned but privately funded. The CEA offers a choice of deductibles at 5%, 10%, 15%, 20%, or 25%. A 2024 Federal Reserve survey found that 37% of Americans couldn't cover a $400 surprise expense. Set that next to a $120,000 earthquake deductible, and you're looking at financial risk on an entirely different scale.
The topic will be considered in further paragraphs it is related to the California earthquake deductible, insurance, which is not relevant to your CEA, the percentage that will fit you, and the prevention of deductible problems.
What Is the California Earthquake Deductible Percentage Law?
How does it work with a 5% to 25% Deductible Percentage? (Some Examples Are Given)
What Is the CEA Insurance and What Does It Insure?
Why Does the Earthquake Deductible Behave Like That?
How To Calculate Your California Earthquake Deductible?
Three Approaches to Lowering Your Earthquake Deductible Problems
How To Prevent Your Earthquake Deductible Problems with PillowPays?
Important Points
FAQs
Sources & References
In simple terms, the percentage rule means the earthquake deductible is calculated as a percentage of the dwelling coverage limit, which equals your home's rebuilding cost, rather than a fixed dollar amount. The California Earthquake Authority allows you to pick 5%, 10%, 15%, 20%, or 25%. Here is a catch: this deductible will be charged separately for your dwelling, personal property, and all other coverages.
Here's where a lot of homeowners get tripped up: the percentage rides on your Coverage A dwelling limit, the rebuild cost, not your home's market value, and not the size of the damage. Say your home is insured to rebuild for $500,000, and you choose a 10% deductible. Your dwelling deductible is $50,000, full stop, whether the quake causes $60,000 or $600,000 in damage.
Want to see how percentage deductibles play out across other types of disasters? Check out our guide on how deductible reimbursement works.
Rebuild Cost | 10% | 15% | 20% | 25% |
$400,000 | $40,000 | $60,000 | $80,000 | $100,000 |
$600,000 | $60,000 | $90,000 | $120,000 | $150,000 |
$800,000 | $80,000 | $120,000 | $160,000 | $200,000 |
$1,000,000 | $100,000 | $150,000 | $200,000 | $250,000 |
Comparing those figures with other deductibles will surely leave one amazed.
A 10% deductible for a $600,000 residence in California means $60,000 for the homeowner. Yes, it is not a mistake, but the consequence of infrequent yet destructive earthquakes. It is the reason why CEA offers this type of insurance in the case of almost total property loss, not some minor issues like cracks.
Limitations on Eligibility for Reduced Deductibles
There are some limitations for homeowners who are eligible for lower deductibles. For example, if the limit of dwelling in Coverage A exceeds $1,000,000, or your house was built before 1980 on an elevated structure without retrofitting, then you should opt for 15%, 20%, or 25% deductibles. In addition, 5% and 10% deductible options are offered only for more secure properties.
"The earthquake deductible is very unusual in the insurance world," states Linda Park, a Certified Financial Planner with Horizon Wealth Advisors. "Having such deductibles as $60,000 or even $120,000, earthquake insurance will work only in the time of a true disaster. People should realise that they buy insurance to cover the loss of their home, not repair it."
Now that we have learned a little more about this agency, you may wonder what it does and what the CEA is. The California Earthquake Authority is a publicly operated, privately financed nonprofit organisation that provides earthquake insurance for homeowners throughout California, covering around 70% of the state's earthquake insurance.
Dwelling: Your building, as well as any attachments like the garage.
Personal Property: Personal belongings you have (coverage limit is optional).
Loss of living expenses: In case you have to move out of your residence.
Loss assessment for condominium owners: $100,000 for repairs to common areas.
Fire caused by an earthquake (covered under your regular homeowner's policy)
Flood or tsunami caused by an earthquake (need separate flood coverage)
Swimming pool, fence, driveway, and landscaping (excluded coverage)
Auto damage (comprehensive coverage in auto insurance policy)
Stone facade (usually excluded or a high premium required)
What makes the CEA's setup odd is that the deductible applies separately to the dwelling and personal property coverages. In practice, that can mean one deductible for fixing the structure and a second one for replacing your stuff. If you want to dig deeper into homeowners' deductible strategies, take a look at our homeowners' deductible reimbursement guide.
Earthquake deductibles exceed those for all other lines, and that has everything to do with the catastrophic yet infrequent risk. While hail and wind damage occur continuously at moderate levels, a single large earthquake can destroy entire neighbourhoods. This means insurers must set high deductibles to make coverage feasible and affordable.
Timing: Most CEA insurance policies cover losses incurred within 72 hours of the initial earthquake. If there are more earthquakes within these 72 hours, they are generally considered a single event and thus have a single deductible amount. The Insurance Information Institute's guide to hurricane and windstorm deductibles explains how percentage- and time-based deductible rules apply across different catastrophe perils.
This last point is extremely important: If there were to be an earthquake, resulting in a rupture of some gas pipes and a resultant fire, then this would be covered by your normal home insurance policy, using your normal AOP deductible, not your earthquake insurance. Earthquake insurance covers damage from shaking, and your homeowners' insurance covers fire damage. Post-earthquake, this information will come in handy.
Your house is eligible (new construction or retrofitted, below $1 million)
You desire coverage in the event of partial loss, not only total loss.
You are willing to pay for the increased premium due to the reduced deductible.
You have small savings for covering the large amount.
Your house is mandated to be (more than $1 million, built before 1980, without retrofit)
You desire to strike a balance between cost and catastrophic coverage.
You have savings or home equity to cover the deductible.
You're primarily insuring against a total loss of the home.
You want the lowest possible premium.
You fully understand you'd pay $160,000 to $250,000 out of pocket on a high-value home.
"Choosing an earthquake deductible is really about answering one question: are you insuring against repairable damage or destruction?" says Robert Delgado, Independent Insurance Agent and member of the National Association of Insurance and Financial Advisors (NAIFA). "If you can't cover a $60,000 deductible, a 10% policy makes sense despite the higher premium. If you only care about catastrophic loss and have deep reserves, a higher deductible saves money."
On the auto side of things, check out our guide to auto deductible reimbursement by insurer.
Retrofitting pays off twice over. The CEA offers premium discounts of up to 25% on older homes that have been properly retrofitted, including foundation bolting and cripple wall bracing. On top of that, a retrofit can move a pre-1980 home into the lower deductible tiers. California's Earthquake Brace + Bolt program even chips in seismic retrofit grants of up to $3,000.The Insurance Information Institute's guide to lowering homeowners insurance costs explains how mitigation reduces both your premium and your risk.
In addition to information on deductible tiers, the CEA provides a free premium calculator that illustrates how each deductible level affects the premium. Enter 10%, 15%, and 20% and see how much you can save in dollars. In some cases, an increase to the next deductible level does not significantly affect the premium, so you will benefit from keeping the deductible low. In others, savings are substantial. But only calculations of your own will tell the true story.
Due to extremely high deductibles, no single product can cover the full amount. It would be better to create layered coverage by setting up a special deductible-focused savings reserve, maintaining your CEA policy in case of catastrophic losses, and using a deductible reimbursement program for smaller deductibles associated with certain claims, such as the homeowners' AOP deductible after an earthquake-induced fire.
In addition to information on deductible tiers, the CEA provides a free premium calculator that illustrates how each deductible level affects the premium. Enter 10%, 15%, and 20% and see how much you can save in dollars. In some cases, an increase to the next deductible level does not significantly affect the premium, so you will benefit from keeping the deductible low. In others, savings are substantial. But only calculations of your own will tell the true story.
For more strategies, visit the deductible protection strategies.
How PillowPays Can Help The earthquake deductible itself may run into the tens of thousands, but the claims that travel with it, like a fire following a quake under your homeowners policy, come with ordinary deductibles, and that's exactly where PillowPays steps in. PillowPays pays back your homeowners and auto deductibles within days, up to your plan limit. Basic Protection runs $10 a month and covers up to $500 a year for home and auto. Premium Shield, at $30 a month, covers up to $2,000 a year across home, auto, renters, and commercial property, with priority processing. Compare deductible protection plans to fill in the gaps in your coverage. |
The deductible that applies in the case of earthquake insurance will depend on the percentage figures relative to the cost of replacing the property from the earthquake, and this could range between ($5,000, $10,000, $15,000, $20,000 or $25,000). The deductible amount for 10% earthquake insurance on a property valued at $600,000 is $60,000.
More than 70% of the earthquake insurance plans are provided by the California Earthquake Authority (CEA) in California, and these are provided by CEA member insurers, including State Farm,
Houses that cost more than $1 million or were constructed before 1980 without any retrofitting qualify for a 15%, 20%, or 25% deductible. The 5% and 10% deductibles are for new or retrofitted houses.
The Quake Insurance is used to cover losses arising from an earthquake. However, the fire that follows the earthquake will be covered by the general homeowner's insurance policy. Floods and tsunamis will require flood insurance.
Exposure control measures include retrofitting for deductibles, lower-deductible qualification, use of a CEA premium calculator, earthquake fund formation, and creation of a reimbursement program for deductibles.
The deductible is always a percentage of the rebuilt value, typically between 5% and 25%. So, if the coverage for rebuilding your home under your insurance policy is $500,000 and you have a 10% deductible, then $50,000 is the first amount of damage from an earthquake you'll have to pay.
California Earthquake Authority allows you to choose 5%, 10%, 15%, 20%, and 25% of your dwelling coverage amount. If you have a more expensive house ($1M+), or it was built before 1980 on a raised foundation without verification of retrofits, the limits are only 15%, 20%, and 25%.
In most cases, no. In California, earthquake damage is excluded from the standard homeowners insurance policy, so you will need to purchase an additional earthquake policy, most commonly through CEA. The only exception to keep in mind is that fire caused by an earthquake is covered by your standard homeowners insurance policy.
Because they are infrequent yet extremely damaging. One major earthquake can destroy entire swaths of territory at once, resulting in massive financial damage. This is the way to ensure earthquake insurance is financially viable while protecting you from the complete loss of your property. This is catastrophic insurance, not the repair one.
You can do so by having your home retrofitted and reducing the percentage tier that you can apply to. Retrofitting your home with foundation bolts and cripple walls may earn you discounts on premiums of up to 25% and qualify you for lower deductibles, even for older properties. You could even receive up to $3,000 in grants through the Earthquake Brace + Bolt program of California.
Think of this article as background information, not insurance, legal, or financial advice. CEA deductible options, premiums, and coverage terms differ from one home and insurer to the next, so for guidance tailored to your own situation, talk with a licensed California insurance agent.
Insurance Information Institute (III). (2025). Background on Hurricane and Windstorm Deductibles.
Federal Reserve Board. (2025). Economic Well-Being of U.S. Households in 2024.
Insurance Information Institute (III). (2025). Understanding Your Insurance Deductibles.
Insurance Information Institute (III). (2025). 12 Ways to Lower Your Homeowners Insurance Costs.
National Association of Insurance Commissioners (NAIC). (2025). Hurricane Deductibles.
About the Author Mark Lopez Mark Lopez is an insurtech entrepreneur and angel investor, and he co-founded Pillow Pays, a subscription-based life insurance platform. His background runs through RBC Ventures and Mastercard Fintech, and he founded RedFlagDeals.com, so he knows subscription financial products, embedded insurance, and consumer deductible protection strategy inside out. He earned a Bachelor of Commerce from Queen's University and has been named a Top 40 Under 40 leader in Canada's technology and finance scene. |