Most California homeowners have no insurance protection against a major earthquake, according to a recently released rating firm analysis.

And those Californians who do have quake coverage may not get the full benefit of their policies, said New York-based Standard and Poor's, in a report marking tomorrow's 100th anniversary of the San Francisco Earthquake.

The firm said the California Earthquake Authority, the state's publicly managed, privately financed insurer, could see its funds come up short if one or more large earthquakes occur.

"Its ability to assess its members for an initial $2.2 billion in claims after a triggering event will expire on Dec. 1, 2008," said S&P credit analyst Michael Gross.

If a major earthquake comes and claims are higher than the authority's total claims-paying ability, policyholders might have to accept a prorated percentage of their expected coverage, which could call into doubt the credibility and value of such policies, Mr. Gross said.

Total personal property damage costs from a high-magnitude California earthquake could realistically exceed $100 billion. Approximately 35-to-55 percent of this damage might be insured. "California's homeowners are unprotected from the financial consequences of a major quake to a disturbing degree," Mr. Gross said.

CEA had a base claims-paying ability of $7.2 billion as of November 2005, comprising its own equity totaling $2.2 billion at year-end 2005, and multiple layers of post earthquake membership assessments and reinsurance, according to public filings.

"Despite these layers, however, CEA's funds could run dry if one or more large earthquakes occur," Mr. Gross said.

The report said that "to a disturbing degree" California homeowners are unprotected from the financial consequences of a major earthquake. About 85 percent of state homeowners have chosen not to purchase it.

"Part of the reason is that coverage is expensive," Mr. Gross said.

Deductibles, whether on policies bought through CEA members or privately, are high, usually at 15 percent of the insured value of a home. And premiums are in the range of $4 per $1,000 of insured coverage, Mr. Gross said.

Special Reports /

A Big Quake Would Leave Calif. Homeowners Hurting

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