A sublimit is a classic insurance definition that few consumers understand.
Sublimits “limit” coverage on certain items of property.
The Definition of a Sublimit found on a CEA policy:
According to the Homeowners Choice CEA policy [version BEQ-3C (01-2019 edition] page 7 a Sublimit “means a dollar limit on a coverage for a specific type of property within a category of property that is subject to a higher total limit of insurance.” Please note that not all definitions of sublimits are the exact same. This defition is found within the Definitional [or bold face type] page on the insurance policy. The definition continues: “Payment under a sublimit will reduce the amount available under the total limit of insurance. For example, a chimney is covered under “COVERAGE A: DWELLING” which has a limit of insurance shown on the DECLARATIONS page, but no more than the $10,000 sublimit will be paid for loss to any and all chimney(s). In that example, the overall amount available under the “COVERAGE A: DWELLING” and “COVERAGE B: EXTENSIONS TO DWELLING” combined single limit of insurance would be reduced by the amount that is paid for loss to any chimney.”
Sublimits are exceptionally common on insurance policies. On a typical homeowners insurance policy though they are more often used in regards to Personal Property items and not structural elements. But as QuakeCov has said numerous times, Earthquake Insurance is different.
The big take away from the understanding of sublimits is that they “Limit Coverage” for certain types of structural or personal property items. This is why its important to read a given insurance policy and not just rely on the agent or broker. Sublimits can sometimes also go by the term “Special Limits.”
“Reduce the Amount Available Under the Total Limit of Insurance”
One other item to consider is that just because something is not listed in a Sublimit, does not mean that its covered. The item in question may just not be covered or may be listed in the excluded items.
Notable Special Limits of Coverage A on the CEA Policy:
Chimneys: “$10,000 for loss or damage to any and all chimney(s) attached to or part of the dwelling, regardless of the number of chimneys covered.”
Carpet: “$5,000 for all loss or damage to the dwelling or to wall-to-wall carpeting attached to the dwelling caused by fungi the presence of which directly results from an earthquake that commences during the policy period as part of a seismic event…”
*this is not intended to be a complete list.
Notable Special Limits of Coverage B and Sections on the CEA Policy:
Loss Assessments: “loss assessments is provided as a $10,000 sublimit of the combined single limit of insurance for “COVERAGE A: DWELLING” and “COVERAGE B: EXTENSIONS TO DWELLING…”
Land: “The cost to replace, rebuild, stabilize or otherwise restore the land that is covered under “OTHER COVERAGES” Item 3, “Land,” but only up to the sublimit of $10,000, and…”
Energy Efficiency and Environmental Safety Replacement Upgrades: This one is too complex to paraphrase, but read the California Earthquake Authority policy for further details.
Swimming Pools: On numerous insurance policy forms, pools can be sublimited. However on the CEA BEQ-3C it does not have a pool sublimit. The reason for this is because its listed under “Property Not Covered-Coverage C” it lists: Point 12″Swimming pools, spas, and hot tubs, including all of their components.”
Additionally this article is not intended to be a deep dive on Coverage B sublimits as the subject can very complex. When in doubt, check it out – Read your Policy and Ask your Agent. It can be helpful to ask your agent to show you were it is [or is not] covered.
*this is not intended to be a the entire list.
Sublimit “means a dollar limit on a coverage, for a specific type of property…“
Special Limits [Sublimits] of Coverage C on a CEA Policy:
“The limits of insurance shown below are sublimits of the policy’s limit of insurance provided for “COVERAGE C: PERSONAL PROPERTY” and do not increase the limit of insurance for “COVERAGE C: PERSONAL PROPERTY” shown in the DECLARATIONS.” and it continues “The sublimit for each numbered category, immediately below, is the total limit of insurance for all loss in that category. For property that falls into more than one category, the lowest applicable sublimit will apply. If any item of property falls both into one of the following sublimits and one of the categories of property listed under “Property Not Covered—Coverage C,” then we do not cover that item of property.”
Here is a lits of Examples of CEA Sublimits that pertain to Personal Property Items:
Here is the abbreviated list:
Money: “$250 in the aggregate on all money, bank notes, coins and medals…” Money has a sublimits on the CEA policy.
Securities: “$250 in the aggregate on all securities, checks, cashier’s checks, traveler’s checks, money orders, and other negotiable instruments…” Various forms of securities have sublimits on California Earthquake Insurance Policies.
Electronics: “$3,000 in the aggregate on all computers and other electronic data processing equipment, including storage media and software” Electronics subject to sublimits by the CEA.
Business Property: “$1,000 in the aggregate on all business property other than computers…” Property owned by a business on a personal earhthquake policy subject to sublimits.
Jewelry: “$3,000 in the aggregate on all jewelry, watches, furs, and precious and semi-precious stones, but not more than $1,000 for any one article.” Various versions of jewelry, including furs, watches, precious [and semi-precious stones] subject to only a bit of coverage with the CEA sublimit.
Collectibles: “$3,000 in the aggregate on all collectibles, including but not limited to sports cards; collectible dolls, model trains, or toys; collectible postage stamps; collectible autographed items; memorabilia; and commemorative or otherwise collectible plates, spoons, or cups…” There is a CEA sublimit for collectibles.
Liquid: “$3,000 in the aggregate on all beverages contained in bottles or in other glass, ceramic, or pottery containers, including but not limited to wine, port, liquor, beer, and all other alcoholic or non-alcoholic beverages.” Liquids also subject to a sublimits.
*this is not intended to be a complete list.
Property not Owned by Insured: “Property that is not owned or used by an insured, including but not limited to the property of roomers, boarders and other tenants, except (a) the property owned by others that we cover at your request under Item 2 of “Property Covered—Coverage C,” subject to the applicable sublimit of $2,500, and (b) the property of roomers and boarders related to any insured.”
Please note that just because an item is NOT listed on here does not necesarily mean that it is covered, it could be listsed as an Excluded item and hence may have no coverage at all.
Keep in mind that many people that purchase CEA policies dont even purchase coverage for personal property items and hence may not have any personal property coverages and therefore these sublimits may not be relevant to their policy coverage.
How to Provide Earhtquake Coverage for High Value Items
Typically you do NOT provide coverage for high value items on an earthquake policy. Usually you would contact your home insurance agent and have them listed as special covered items. This type of policy goes by numerous names: Valuables, or Floaters. These coverage forms [and you must read them to confirm] may provide coverage from a seimic event.
Why Sublimits or Special Limits are So Important On Insurance Policies:
To an insurance agent sublimits seem fairly normal, but to consumers they are confusing. Sublimits further reduce coverage so its important to know, on all policies, what the sublimits are. Sublimits are common for personal property items but not as common on building structures. Read your CEA earthquake insuance policy for more details.