As a business owner, you invest significant resources into developing your business and the property associated with it. These things can be insured thanks to your Property Insurance or Business Policy against theft, fire and other dangers. Unfortunately, the standard commercial insurance policy does not include business earthquake insurance. If your company resides in California, you need to give earthquake insurance careful consideration.
The biggest challenge many companies and business face after an earthquake is their inability to bounce back from devastating losses, especially financial. When earthquake claims started to increase, many carriers stopped offering business earthquake insurance altogether.
Your property policy does not cover the damage if the cause is earth movement or subsidence. These types of coverage do not appear in a typical property policy, and the cost will have to come out of your pocket.
Living in California makes business earthquake insurance an imperative. Studies have shown that the state has a 99% chance of having an earthquake stronger than 6.7 and a 45% chance of having a major earthquake higher than 7.5 in the next three decades.
Businesses with earthquake insurance may find it easier to receive a bank loan or government funding. In some earthquake-prone areas, banks may require companies with a commercial loan to purchase business earthquake insurance.
Keep in mind that earthquakes are not seasonal. They can occur on any day at any time. Unlike flooding or tornados, earthquakes are a risk year-round. It’s always earthquake season.
Many companies purchase an endorsement to a typical business owner insurance policy. An endorsement provides coverage for damage caused by shaking during an earthquake. It covers structural damage to the building and damages to the property.
Businesses may also purchase earthquake insurance as a separate policy. This type of policy makes the most sense for larger companies that need to save on overall premiums for business insurance coverage. Smaller companies may have a harder time going this route in the event of a loss. Damages suffered during an earthquake loss would require the small business owner to submit an earthquake claim to one insurer and damages caused because of the quake to another insurer. In this scenario, it would be much easier only to have the one insurer allocate the loss accordingly.
Premiums for business earthquake insurance may vary throughout the United States. The prices in the West are higher than those in the East because of the frequency of earthquakes. Typically, businesses purchase earthquake insurance as a premium per $1,000 of valuation. Premiums take into consideration building materials such as wood or brick, as well as the age of the structure.
Earthquake Losses in Other Business Policies
There are a few other standard business plans that might cover earthquake losses without the need for additional endorsement:
- Commercial Auto – Many standard business auto policies cover loss or damage in the event of an earthquake. Coverage includes damages from fire, debris or other activities.
- Workers’ Compensation – If an injury to an employee occurs at work due to an earthquake, workers’ compensation will cover this type of loss.
- Business Interruption – Check with your insurance professional to ensure your business interruption policy does not exclude earthquakes.
Earthquakes can be unpredictable. No one knows when or where the next one might happen. The one thing you can control is whether your business has protection if it does. Reach out to Post Insurance Services, Inc. and let them provide the peace of mind that comes with knowing they will meet your business earthquake insurance needs.
For a free quote call us today at (800) 262-9998 or connect with us online.