Palomar Specialty Insurance is an A.M. Best rated ‘A-’ carrier offering flexible earthquake insurance in California via its Palomar Value Select option, serviced by Arrowhead General. Palomar has multiple quake insurance options, but Value Select is its more flexible option with competitive rates. It’s also the default earthquake insurance option offered to GEICO homeowners policyholders in California.

This review has not been reviewed or endorsed by Palomar or any other insurance carrier – consult a licensed agent before making an insurance decision.

Palomar Value Select is one of the most comprehensive options available for CA quake insurance, covering items California Earthquake Authority (CEA) policies no longer cover. With up to $15 million in coverage available it’s well suited to higher value homes.  

Pros

• Deductibles as low as 2.5% available
• Lowest deductibles available on high value homes up to $15 million (CEA only offers deductibles of 15% or higher for homes valued over $1 million)
• A.M. Best ‘A-’ rating for Palomar Specialty (vs B++ for the CEA)
• Breakables like china and swimming pool coverage available (breakables limited to $500 via CEA)
• No chimney sublimit (CEA only covers up to $10,000 chimney damage)
• Can choose separate deductible for each coverage type (dwelling, personal property, loss of use) so you can get lower rates in some coverage without sacrificing coverage in other areas 

Cons

• Steep slopes subject to underwriting review
• Homes on the historic register aren’t eligible
• Aftershocks counted as one event 168 hours after the first quake (versus 300 hours for the CEA)

What’s covered and excluded?

This summary based on a sample policy can help you see some of what’s covered and what’s excluded at a glance. Always review specific coverage in detail with a licensed agent before making a decision. The below is not a comprehensive list or binding document. 

Dwelling (your home)

Coverage limit: Up to $15 million

Deductible: 2.5% – 25%

Palomar Value Select policies cover direct physical loss to your home’s main structure from an earthquake plus…

• Water damage from an earthquake damaging an appliance like a water heater
• Damage to the home from landslides immediately caused by an earthquake
• Debris removal – up to 5% of coverage limit
• Chimneys – no sublimit
• Land stabilization / engineering – maximum $10,000
• Pools – maximum $50,000 if ‘Other Structures’ coverage is chosen 
• Fences and gazebos if ‘Other Structures’ coverage is chosen
• Walkways, driveways, decks, and patios used for entering / exiting the home 
• Other patios, walkways, and hardscape available if ‘Other Structures’ coverage is chosen
• Retaining walls, piers, bulkheads integral to the dwelling structure
• HOA loss assessments ($5,000 minimum, available up to $100,000 as separate coverage)

What’s excluded…

• Fire damage – even if caused by an earthquake. Standard homeowners coverage handles this.
• Flood damage – even if an earthquake triggers a tsunami. Flood insurance handles this.
• Theft – even if caused by looting. Standard homeowners coverage handles this. 
• Landscaping, lawns
• Land – except a maximum $10,000 for stabilization / engineering

Personal property (things inside your home)

Deductible: 2.5 – 25% can be chosen separately from dwelling deductible

Personal belongings in your home are covered, with special limits for these items: 

• Jewelry, watches, stones, precious metals: up to $25,000
• Glassware, china, dishware: up to $25,000
• Fine arts: up to $10,000

What’s excluded…

• Watercraft and aircraft
• Trailers
• Trees, plants
• Animals
• Property owned by others unless the insured is using it on premises
• Data
• Coin and stamp collections
• Business property
• Motor vehicles

Loss of use (a place to stay while you rebuild)

Deductible: 2.5 – 25% can be chosen separately from dwelling deductible

For an extra premium this pays additional living expenses like rent for a temporary home that matches your normal standard of living while you can’t occupy your home because of earthquake damage. 

It also covers lost rent at fair market rental value if your home is a rental property. 

Building code coverage

Deductible: 2.5 – 25% can be chosen separately from dwelling deductible

This covers extra costs to rebuild your home to comply with upgraded building codes that didn’t exist when it was built. 

Can renters or condo owners get coverage?

Condo owners policies are available, but renters are not.  

What homes are eligible?

• Wood frame construction. Reinforced masonry, reinforced concrete and/or metal/steel frame 
• Concrete slab, basement or solid perimeter foundation • 
• 1-4 family dwellings 

Ineligible homes include…

• Dwellings on Historical Register
• Unreinforced masonry dwellings
• Modular and Mobile homes

How much does it cost?

Rates vary based on your location and home’s characteristics like foundation type, framing type, and age. 

The average quake policyholder in California pays $107 a month for about $800,000 in coverage (about $1.57 per $1,000 in coverage) and the most popular deductible is 15% according to our analysis. 

We’ve found Palomar Value Select rates competitive with and in some cases lower than CEA rates. 

What discounts are available?

Homes built before 1973 can get a discount with verification that:

• The dwelling is properly anchor bolted to the foundation with steel anchor bolts on the sill plate four to six feet apart; and 
• Cripple walls if present are braced with plywood or its equivalent; and 
• The hot water heater is secured to the building frame  

Written verification from a licensed contractor or structural engineer is required for the discount, even though many homes built before 1973 already have these features.    

Palomar is a little more lenient than the CEA with this discount, as the CEA requires homes built as late as 1979 to have verification for a discount, and it also requires retrofitting to current building code standards, while Palomar only requires a more basic standard. 

Do you have to insure your home’s full replacement value?

No, Palomar lets you select dwelling coverage that’s 50% or 25% of your replacement value for a lower premium as a way to focus your premium dollars on protecting equity in your home versus the full cost to replace it. 

You can also choose to cover the full value of your home or higher to factor in higher construction cost after a big quake. 

How can you pay your premium?

Auto pay is available as well as monthly and 6x per year payment plan, including via credit card.

Do you have to pay the deductible out of pocket?

No, the deductible is subtracted from the total damage estimate, and you get a check for the total damage less the deductible. 

Can you build elsewhere?

Yes you can build or buy a replacement home elsewhere with insurance settlement funds. 

How are aftershocks handled?

Quakes that happen up to 168 hours after the first damaging quake are considered one event, pulling from the same deductible. Any damage from quakes more than 168 hours after the first with damage will be counted as a new event and your deductible resets.

Palomar can’t cancel your policy before the renewal date due to a quake.

What is Palomar’s consumer complaint history?

The California Department of Insurance recorded the following closed complaints regarding Palomar Specialty Insurance Company:

2022: 2, including 1 deemed without merit

2021: 3, including 2 deemed without merit

2020: 4, including 1 deemed without merit

What is Palomar’s financial rating?

Palomar Specialty Insurance Company received an A- (Excellent) rating from A.M. Best in 2023. It has been rated since 2014. 

Palomar is an admitted carrier in California. If an admitted carrier goes insolvent you have protection for up to $1,000,000 in claims from CIGA, the California Insurance Guarantee Association. California Earthquake Authority policies also have the same protection from CIGA in the event the CEA becomes insolvent.

Bottom Line

Palomar Value Select is one of the most comprehensive and flexible options available for earthquake insurance in California. It offers broader coverage than CEA and others for things like masonry, breakables, and patios via its Other Structures coverage. 

And the ability to set different deductibles for each type of coverage gives flexibility to avoid a big deductible gap on smaller pieces of coverage like loss of use or personal items. With up to a $15 million limit it’s particularly suited to handle high value homes.

It’s worth comparing quake insurance rate options before you settle on the CEA or another default option, and our free tool can give you an estimate of what it might cost in your area.