Mother Nature is a powerful and uncontrollable force. Of all the natural events that occur, earthquakes are among the most destructive.
While commercial property insurance will cover several types of natural events, it doesn’t offer protection against earthquakes – in fact – policies specifically exclude them.
If your business is located in an area that is prone to earthquakes, it’s vital that you shield yourself from the damage that this natural phenomenon can cause by purchasing a commercial earthquake insurance policy.
Commercial earthquake insurance is a specialized policy that covers the damage associated with ground movement caused by earthquakes. Generally, these policies will cover the following:
Coverage begins when the damage has exceeded your policy’s deductible. Business earthquake insurance policies often have high deductibles, which typically range anywhere from 2% to as high as 20% of the value of your building – based on its location, age and condition. It’s important to check with your insurance broker to find out exactly what your policy will cover.
While earthquake insurance does cover a wide range of damages that are associated with seismic activity, it doesn’t cover everything. Some things that your policy won’t protect include:
Following is some example language from a real commercial property policy for earth movement including the earthquake exclusion: Earth Movement – (1) Earthquake, including any earth sinking, rising or shifting related to such event; But if Earth Movement, as described in Paragraphs (1) above, results in fire or explosion, we will pay for the loss or damage caused by that fire or explosion.
For business owners who operate in areas that are prone to seismic activity, commercial earthquake insurance is a wise investment for the following reasons:
The US Geological Survey reports that earthquakes have occurred throughout 39 states since the year 1900. Though earthquakes may not be common in certain areas, fault lines are located everywhere, which means that seismic activity can happen any place and at any time. This means that if one does occur and your business is damaged as a result, you could be looking at serious losses.
Following are some basic questions to ask yourself about your business to determine if you need commercial earthquake insurance:
With all of that being said, commercial earthquake insurance is something that all business owners – no matter where they operate – should consider. However, organizations that are located in areas that are particularly prone to earthquakes, such as California and Oklahoma, should definitely invest in this type of insurance coverage.
The cost of commercial earthquake insurance varies. Different insurance providers offer different prices and coverage options. Furthermore, there are several factors that will impact the cost of this type of policy, such as how close your business is to a fault line, the history of seismic activity in your area, the size of your business, and the type of equipment and machinery used in your operation. To find out how much a commercial earthquake insurance policy will cost, speak to a broker who works with a reputable insurance company that offers this type of coverage.
We hope this article on commercial earthquake insurance was informative. If you are trying to determine if business earthquake insurance is something that your company needs, ask yourself if you have access to the financial resources that may be necessary in order to make repairs to your business should an earthquake occur? If your answer is ‘no’ or you aren’t sure, then you should seriously consider investing in this type of coverage. It’s far better to have the protection available because there is no way to accurately predict when and where an earthquake will occur.
