In August 2014, a 6.0-magnitude earthquake hit California’s Napa Valley. Vineyards and businesses in the fabled Northern California wine country suffered more than $80 million in damage.
Trip Morano, Colony Specialty’s vice president of underwriting, says many businesses had a hard time picking up after the earthquake because they never obtained earthquake insurance.
The risk isn’t just in California, either – earthquakes strong enough to damage buildings can occur in the Pacific Northwest, Missouri, Alaska, Hawaii and even South Carolina.
Here are a few of Morano’s suggestions for businesses considering earthquake insurance:
- Think about your needs: Insurers exclude earthquake damage from many businesses’ policies unless they specifically purchase earthquake insurance. As a result, Morano says, many businesses can’t bounce back financially after earthquakes.
- Take your workplace and assets into account: Different kinds of businesses have different needs. Before choosing a policy, speak with your insurance representative to see how your store, office, industrial facility or outdoor location is covered.
- Keep track of pricing and deductibles: According to Morano, pricing and deductibles for earthquake insurance vary widely by geographic region. Outside of California, there is generally much lower pricing and a more favorable deductible.
- Consider the secondary benefits: Services such as Colony Specialty’s earthquake insurance can make it much easier for businesses to receive bank loans and government funding. In certain earthquake-prone areas, banks may even require commercial loan recipients to have earthquake insurance.
- Ask lots of questions: Employers should find out if their policy would cover damaged merchandise and business interruptions, as well as what kind of financial costs are involved.
There’s one final reason for businesses to consider earthquake insurance: Unlike flooding or tornados, earthquakes are a year-round risk.
“It’s always earthquake season,” Morano says.