Lower CA Residents’ Earthquake Deductible with Buyback Program


While 90% of the country’s earthquakes occur in California, only about 10% of residents carry Earthquake insurance, according to the Federal Emergency Management Agency (FEMA). Some homeowners mistakenly believe they have coverage with their Homeowners policy while others don’t consider the gravity of the risk. In addition, many homeowners don’t like the high deductibles with Earthquake policies.

Traditional Earthquake policies may have up to a 25% deductible on the total insured value of property and personal contents. Coverage will kick in only when the deductible is exhausted, which can add up to significant out-of-pocket expenses for a client.

The Abacus Earthquake Deductible program enables homeowners to lower their earthquake deductible down to 2.5%, making Earthquake insurance a purchase with a reasonable deductible.

Abacus is an ISC company.

How the Earthquake Deductible Buyback Program Works

Our one-of-kind Deductible Buyback solution is the only admitted program on the market, is written with an A-rated carrier, and follows each carrier’s Earthquake form.

The program is available throughout California, with minimum premiums of $500 for Los Angeles County and $250 for all other counties. The coverage term is 12 months.

The program works with any existing Earthquake policy from any insurance company for homes of any size, including single-family homes, duplexes, triplexes, and fourplexes. There are no age restrictions.

Carriers use one of three approaches to earthquake deductibles: percentage of coverage, percentage of dwelling, and percentage of TIV (total insured value). Our program works seamlessly with the existing policy regardless of the deductible approach used. Deductible reductions include 12.5%, 10%, 7.5%, 5%, and 2.5%.

Percentage of Coverage Deductible

For example, if an Earthquake policy has a deductible based on the percentage of coverage, the deductible will be applied separately to the limits for each of these coverages: Dwelling, Other Structures, Contents, Loss of Use, and Building Code. A 15% deductible on an Earthquake policy with Dwelling coverage of $1 million is $150,000. For Other Structures with a limit of $100,000, the deductible is $15,000, for Contents with a $500,000 limit, the deductible is $75,000, and so on.

The client can purchase a 10% deductible buyback to reduce the deductible to 2.5% for each coverage amount.

Percentage of Dwelling

With policies in which the deductible applies to only a percentage of the dwelling amount, a Homeowners policy with a $3 million limit and a 15% deductible will have a $450,000 deductible. A 10% deductible buyback would reduce the client’s deductible to $150,000.

Percentage of TIV

For Earthquake policies with a deductible written based on the percentage of TIV, the deductible is based on the aggregate sum of all coverages. If the total limits of each coverage add up to a TIV of $1.485 million, a 15% deductible would be $222,750. A 10% deductible buyback would lower the client’s deductible to $74,250.

In each case, the deductibles the clients would have to pay in the event of a loss are much more manageable and help facilitate the purchase of Earthquake insurance.

Get more information about the Abacus Earthquake Deductible program here.