Finding faults in an earthquake story: Your recent article "Rubble With a Mortgage" (Aug. 1, by Marc Herman), concerning earthquake insurance, contained several factual errors, some of which were erroneously attributed to me as a spokesman for the California Earthquake Authority. Your reporter drew a large number of rather generalized conclusions about earthquake insurance based on what clearly was a significant misunderstanding about the nature and origins of earthquake insurance in California.
I would like SF Weekly to correct those errors so that your readers will have a better understanding about earthquake insurance and can make good decisions based on accurate information.
1) The article states that after the Northridge earthquake, "Sacramento separated seismic damage from other household disasters, like fire, termites, or a Muni bus crashing into the yard." Sacramento did not separate earthquake damage from other household disasters. Earthquake damage has never been covered by basic homeowners' policies. The insurance industry sought to repeal the statutory provision that requires insurers selling homeowners' policies in California to also offer earthquake policies. The Legislature declined to repeal that requirement and it remains in effect today as an important protection for homeowners and consumers.
2) The article states, "The [California Earthquake A]uthority's basic job was to draft, market, and sell a new, publicly backed earthquake insurance policy." This statement contains several errors. The California Earthquake Authority was created to establish a shared risk pool for private insurers. It did not draft the basic earthquake policy that is now the dominant earthquake insurance policy available in California. The Legislature, with the support of groups like Consumers Union, drafted the policy in recognition that without a basic, catastrophic insurance policy, consumers would be left with no protection against earthquake losses.
The CEA does not sell earthquake policies directly to consumers. Policies are sold by agents and other representatives of the 19 insurance companies that voluntarily joined the CEA. Most important, the CEA is not publicly backed. No public money of any kind is used to administer the CEA or to pay claims after an earthquake. The CEA is funded exclusively by premiums and by the private insurance companies that are members.
3) The article states, "The problem was, the CEA came up with a terrible product ...." As noted above, the basic earthquake policy was approved on a bipartisan vote of the Legislature, with the support of Consumers Union, well before the CEA was even created. The creation of a basic or catastrophic earthquake policy was seen at the time as a necessary step in preserving a residential homeowners' insurance market.
4) The article states, "[The] deductible is a flat 15 percent ...." While the basic policy that was approved by the Legislature contains a 15 percent deductible, CEA policyholders have the option of purchasing policies with a 10 percent deductible.
5) The article states, "Nor did the policy cover much. It was limited to your house's walls, roof, and foundation." Like all insurance policies, the CEA policy contains exclusions. However, it covers much more than walls, roof, and foundation. Policyholders may purchase up to $100,000 in coverage for the contents of their home. The policy pays for all costs to restore the home to pre-earthquake condition once the deductible has been met. It will pay up to $15,000 for emergency living expenses if your home is uninhabitable, it will pay for emergency repairs to make your home safe, and it will pay to remove debris, stabilize soil, and upgrade your home to current building codes.
6) The article states, " ... the CEA policy does not cover what it calls "contents' ...." The basic earthquake insurance policy includes up to $5,000 in coverage of contents. CEA policyholders have the option of increasing coverage for contents up to $100,000.
7) The article states, "So only if your house is gravely damaged will you get some money to repair it, usually capped at $350,000." There is no "usual" cap on CEA coverage and no cap of $350,000. The CEA policy covers the cost of repairing your home up to the full-insured value as indicated under Coverage A of your homeowners' insurance policy. If the Coverage A value of your home is $1 million, the CEA will pay up to that amount to repair your home, once you have met your deductible.
8) The article states, "Renters basically have to hope their landlords have paid extra for earthquake insurance. Even then, you'll have to pay to replace your possessions." CEA insurance up to $100,000 is available for renters who wish to cover the contents of rented property.
As you can see, your article was prepared and printed with some very significant errors. Please do your readers the service of providing them accurate information on something as vital as earthquake insurance for residents of the San Francisco Bay Area.
Spokesman, California Earthquake Authority
Marc Herman responds: 1) Yes, homeowners' policies have treated earthquake coverage separately from other coverage. But the fact is that prior to 1994 it was possible and convenient to include comprehensive earthquake coverage with a regular homeowners' policy. That wasn't so after 1994, when suddenly "[y]ou couldn't get homeowners' insurance in California because of this earthquake issue," as Hull himself said. The Legislature, by the very fact of creating the CEA, decided to treat earthquake insurance differently from other types of policies.
2) The Legislature did devise the basic policy, and the origin and chronology of that policy should have been made clearer, with less blame assigned to the CEA. I apologize for the mischaracterization.
I defined "sell" the way Hull did in our conversations and the way the CEA does in its own mission statement on its Web site: "Acting through its participating insurers, the CEA sells earthquake policies to homeowners ... and renters throughout California ...."
By "publicly backed," I was trying to say that the CEA was a state-run entity, rather than a private entity that answered to stockholders and customers. The CEA is indeed a public office, designed to pay for itself. I'm sorry if my language was open to other interpretations.
3) As stated above, the Legislature, not the CEA, came up with the policy; I apologize, again, for suggesting otherwise.
4) Throughout the story, I refer to the basic policy, which has a 15 percent deductible. The 10 percent option is a very recent development and will mean even higher premiums on an already expensive policy.
5) Again, the phrase "walls, roof, and foundation" refers to the basic policy. It wasn't meant to be a comprehensive list of everything in the policy, but to make the point that the CEA's basic package covers mostly structural damage.
6) If your house falls down, yes, $5,000 of your stuff is covered. But in the much more likely event that your house stays mostly standing but lots of your stuff flies around and gets broken inside, you are far less likely to be reimbursed. The CEA's statement on coverage limits, available on its Web site, says as much: "The 15 percent deductible ... is determined by the amount of insurance on the structure alone, and only structural damage counts toward meeting the deductible. This means that, regardless of the magnitude of damage to your contents and personal property, unless a CEA insured has damage to the structure equaling at least 15 percent of its insured value, the CEA will not pay any claimed loss for contents or structure."
7) I apologize for the error.
8) I stand corrected.
Maybe the piss keeps reviewers away: Mark Athitakis' review of the new Funky Precedent Vol 2 compilation (Reviews, Aug. 8) proved something I've suspected for a while: S.F. music journalists are out of touch with local bands.
Athitakis commented that "Fan Club," a track by Stymie & the Pimp Jones Luv Orchestra is a "limp piece of frat-funk." Those who follow Stymie would recognize that "Fan Club" is meant as a deliberately humorous, frat-funk song. It's meant to be tongue-in-cheek, unlike the band's more vitriolic tunes. Negative reviews are nothing new in the music journalism game. But Athitakis' willful ignorance is consistent with recent SF Weekly articles that promote whatever flavor-of-the-month national band is currently passing through the Great American Music Hall yet ignore unsigned local bands.
What the hell has happened to coverage of damn good local acts? These musicians are struggling to live in San Francisco and playing gigs in piss-stained clubs. Why is no one looking out for them? I fear that Athitakis and the Weekly have finally and decisively turned their backs on a very talented crop of musicians.
A story that struck the right chord: Great article on an instrument that usually gets overlooked (along with the player) ("Steel Away," Music, Aug. 1, on pedal steel guitar player Joe Goldmark). Congrats on a well-written and informative article.
Muni may be improving in some neighborhoods, but sure as hell not mine. Thanks for the laughs. Dan [Siegler] should change his title from cartoonist to therapist.