Washington—Senators Dianne Feinstein and Barbara Boxer (both D-Calif.) today introduced legislation to lower the cost of earthquake insurance for homeowners who buy coverage from non-profit, state earthquake insurance programs and directs funding to effective seismic-mitigation measures.

The Earthquake Insurance Affordability Act allows non-profit insurance programs—including the California Earthquake Authority—to access federal loan guarantees in order to provide financial assistance to homeowners following a disaster. In turn, these programs can offer lower insurance rates to homeowners and allow more Californians to purchase protection in anticipation of a major earthquake.

“California sits squarely in the Pacific Ocean’s ring of fire and is the state with the greatest exposure to earthquake damage—yet fewer than 1 in 10 homeowners has insurance to pay for earthquake damage,” said Senator Feinstein. “This legislation will make California communities more resilient against the next major earthquake by expanding earthquake coverage and investments in seismic mitigation, as well as reduce federal disaster spending by millions each year.”

“I am proud to join with Senator Feinstein to introduce this bill to help homeowners in California access affordable earthquake insurance, which is so important to residents and communities as they recover and rebuild after the devastation of an earthquake,” said Senator Boxer.

The legislation will also generate significant non-federal investment in seismic mitigation measures—such as strengthening foundations—by requiring participating non-profit insurance programs to dedicate two percent of any loan guarantee to mitigation projects.

The California Earthquake Authority estimates that in the first five years after passage, hundreds of millions of dollars will be saved and passed along to consumers in the form of lower rates and deductibles.

Following major disasters, the federal government spends billions of dollars in response efforts. By increasing the number of families with earthquake insurance, this bill will result in a lower price tag for FEMA in the event of a tragedy.

The entire cost of the loan guarantees and the administration of the program will be borne by the participating state programs and comes at no cost to federal taxpayers.

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