Northern California Auto Club Will End Homeowners Coverage

Citing mounting earthquake exposure in some of the state’s riskiest areas, the Automobile Club of Northern California announced Monday that it will stop writing new homeowners and earthquake insurance effective Friday.

The company, formally known as the California State Automobile Assn., joins most of the state’s other large property insurers in restricting the growth of their businesses out of fear of another Northridge-style quake.

With 257,000 policyholders, CSAA is California’s fourth-largest homeowners insurer. Because it writes exclusively in Northern California, CSAA suffered no losses with the Northridge quake.

But in Northern California, particularly in the quake-prone Bay Area, CSAA’s earthquake insurance business is nearly as concentrated as was that of Woodland Hills-based 20th Century Insurance Co., which focused on Los Angeles. Losses estimated at $815 million from the Jan. 17 Northridge quake nearly put 20th Century out of business. Mindful of that example, CSAA is trying to reduce its exposure.

“We’ve hung in there long after many insurers withdrew from the market, but it would be unfair to our existing policyholders to allow our catastrophe exposure to expand any further,” CSAA spokesman Barry Shiller said Monday.

In the Bay Area, more than 40% of CSAA policyholders carry quake coverage on their homes, the company said. CSAA will renew coverage for current policyholders.

The homeowners insurance market “is still functioning, but it’s getting increasingly difficult to find coverage,” said Richard Baum, chief deputy state insurance commissioner. The Insurance Department is developing a stand-alone earthquake insurance program through the industry’s high-risk pool, the California Fair Plan.