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History of the California Earthquake Authority (CEA)

It all started with an earthquake

On January 17, 1994, a magnitude 6.7 earthquake known as the Northridge earthquake rocked California's San Fernando Valley—twenty miles northwest of downtown Los Angeles—on a fault no one even knew existed.  

The earthquake caused an estimated $20 billion in residential damages alone—and only half of that was covered by insurance. 

After the dust settled, the Northridge earthquake shook the foundation of the residential insurance industry, which had greatly underestimated the potentially huge costs associated with damage from even a moderate earthquake. 

insurance companies Pull back

Since the 1980s, California law has mandated that insurance companies selling homeowners insurance also offer earthquake insurance. Fearing they wouldn't have enough money to pay damage claims to homeowners if another Northridge-like quake hit, many insurance companies greatly limited the number of homeowners policies they wrote. 

By January of 1995, companies representing 93 percent of the California homeowners insurance market had either restricted or stopped writing homeowners policies altogether, sending the California housing market into a tailspin. 

Enter the "mini policy"

In 1995, the California Legislature came up with a workable solution it thought would help revitalize the insurance and housing markets.  

It created a basic, no-frills "mini policy" that any insurer could sell to comply with the mandatory offer law. The mini policy provided homeowners basic coverage for the roof over their heads, eliminating costly extras like swimming pools and patios. 

CEA is born

In 1996, the California Legislature went one step further and created the California Earthquake Authority (CEA)—a not-for-profit, publicly managed, privately funded entity. Residential property insurers could offer their own earthquake insurance or become a CEA participating insurance company

CEA provides two-thirds of the residential earthquake insurance policies sold in California. By selling our policies exclusively through these participating insurance companies, CEA has become one of the largest providers of residential earthquake insurance in the world. 

A focus on earthquake education, safety, and preparedness

 CEA places a high priority on educating California homeowners and renters about how to stay safe during an earthquake, and how to reduce the risk of earthquake damage and loss.

We work with a number of organizations such as the California Office of Emergency Services (CalOES) and the Earthquake Country Alliance (which created The Great California ShakeOut™). We have also joined forces with the American Red Cross,  and have worked with United Policyholders.

Our collaborative efforts have helped make Californians more aware of their earthquake risk and become better prepared for the next big one.

Cea Continues To Be Earthquake Strong And Earthquake Ready

In 2016, CEA introduced policy enhancements that included more coverage choices, more deductible options, and more affordable rates.

On December 6, 2017, CEA announced a policy count of 1,006,927, surpassing the 1 million mark for the first time in its history. That policy count has continued to rise.

To date, through CEA’s innovative brace + bolt residential mitigation program, more than 17,000 California homes have been seismically retrofitted.

Today, CEA continues to be financially strong, with an A.M. Best rating of B++ (Good) and about $19 billion in claim-paying capacity.

California Wildfire Fund Administrator​

Since 2019, CEA also has administered the Wildfire Fund, a catastrophe fund that provides a source of funding for payment of claims arising from a wildfire caused by any large electrical utility company that meets the legal requirements for participation in the fund.

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