It is interesting, that unlike most other natural disasters, earthquakes are sneaky and come absent a warning – they creep up on us and then without warning the ground begins gyrating and buildings and people are victims of violent and frightening shaking, Standing in line behind most moderate to severe earthquakes, waiting for their chance for causing havoc are avalanches, landslides, flash floods and more. This chain of events makes earthquakes the most feared natural disaster as well as the most costly natural disaster.
Amazingly, in California, where 99 percent of homes face earthquake threats, only 12 percent have earthquake insurance. Countless businesses in California, including startups and fledgling small businesses run from homes. Be aware, your standard homeowner’s insurance does not cover earthquake damage neither does a standard BOP insurance or business property insurance.
In 1994, an earthquake centered around Los Angeles lasted no more than 20 seconds and was felt as far as Las Vegas. Fifty-seven people died due to the earthquake and there were at least 5,000 fatalities. There really is no way to value 57 fatalities or five-thousand injuries. But property damage totaled more than $20 billion. It was one of the most expensive natural disaster in the history of the United States.
In addition, often there are aftershocks following a large earthquake. On their own, they cause much damage, and they can last for months.
Protecting Your Business From Losses Due to Earthquakes
The Earthquake Endorsement
Since standard business insurance policies do not cover earthquake losses, there are two ways to get coverage.
The first is an endorsement to your business policy, and the second is to buy a separate Earthquake Loss insurance policy.
Endorsements must come from the business insurer. Though in California businesses can use the California Earthquake Authority (CEA) for coverage. The state created the CEA as the insurance companies were reluctant, after the 1994 California Northridge earthquake, to continue writing the insurance. Their cause of the reluctance was the increasing population of CA. More people mean more infrastructure, more homes, building. and businesses. The risk was too great so the government stepped up and filled the void.
Additional Separate Policy
Purchasing a separate policy makes sense for larger companies. It is a good strategy for keeping the overall insurance premium low. Yet, having policies with multiple insurance companies may prove difficult for small and new businesses.
The best way to get the best policy for your premium dollar is to meet with your independent business insurance advisor. He or she will go over the options available to you, the cost per $1,000 of property insurance and more. Be sure and discuss the pros and cons of the CEA. Your independent business insurance agent has your best interests foremost in dealing with you.
