Homeowners Policy (HO)Question 152 of 531

Which statement best describes the California Earthquake Authority (CEA)?

a.A private reinsurance pool that accepts only commercial property earthquake risks and pays those losses directly to the building owner
b.A federal agency that pays earthquake losses to California homeowners
c.A privately funded, publicly managed entity that issues earthquake policies sold through participating insurers
d.An industry association funded by assessments on member insurers that pays covered claims left unpaid when an admitted insurer fails

Explanation

The CEA is a privately funded but publicly managed entity created by the California Legislature in 1996. Participating residential property insurers offer CEA earthquake policies as the companion coverage required under §10081's mandatory offer; the participating insurer collects the premium and issues a separate CEA policy, while CEA pays the earthquake losses out of its capital and reinsurance.

Law Reference: California Earthquake Authority (CEA) program

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