Homeowners InsuranceQuestion 152 of 215
Which statement best describes the California Earthquake Authority (CEA)?
a.A federal agency that pays earthquake losses
b.A privately funded, publicly managed entity that issues earthquake policies sold through participating insurers
c.A reinsurer that pays only commercial property earthquake claims
d.An association that pays admitted-insurer insolvency claims
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.
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