Is Earthquake Insurance Really Worth It?
Earthquakes are one of the most common natural occurrences — and yet most standard property insurance doesn’t cover it. This leads business owners to purchase separate earthquake insurance, especially in areas with significant seismic activity. While earthquakes are more prevalent in California, don’t be fooled into thinking they don’t happen in other parts of the country.
What Does Earthquake Insurance Cover?
For commercial buildings, earthquake insurance covers damage to your building as well as any inventory for your business. Depending on your earthquake insurance company and policy, it might also cover lost business income resulting from earthquake damage.
What Requirements Are Needed for Earthquake Insurance?
One of the biggest reasons people decline earthquake insurance is that it can be a costly policy with high deductibles. In addition, an inspector may determine your building requires an upgrade or retrofit before you can qualify for insurance.
Determining Premiums
If you think there is a standard cost for earthquake insurance, think again. The cost comes down to dozens of criteria, ranging from the building’s age and construction materials to soil conditions and replacement costs. The best thing you can do to determine the cost of an earthquake insurance policy is to speak to a representative of a company that offers it in your area. They will ask you a series of specific questions, and your answers will help them determine a cost estimate.
Keep in mind that your deductibles are calculated as a percentage of the value of your property. For example, if your policy has a deductible of 20% and your property is worth a million dollars, your policy would not take effect until after you spent $200,000 yourself.
Because of this, it might best to secure a catastrophic policy with a high deductible instead of earthquake insurance, and to use the money you save to retrofit your building. A retrofit offers many benefits, including reducing your liability, increasing the number of potential future buyers for your building, and eliminating the possibility that a buyer would deduct the cost of a retrofit from the building sale price.
While insurance could certainly benefit your business in the long run, it may be time to hire a seismic contractor to upgrade the structure and design of your building. To get a quote on a seismic retrofit for your business, contact Saunders Seismic for more information.