Insurance 101: CA Earthquake & Ground Movement Activity

California has always been the epicenter for earthquake risks related to businesses and property owners. In recent years, the threat of earthquake has taken a back-seat to wildfire and brush zoning concerns for certain areas of the state. While insurance options are ever-changing for the state of California, I thought we could benefit with a refresher on coverage, specifically for earthquake and associated ground movement.

Some of the most destructive, naturally occurring phenomena impacting individual property owners and businesses are earthquakes, sink holes, mud/rock slides and additional forms of ground movement, all of which are typically excluded on traditional ‘property’ policies unless a specialty policy or endorsement extending coverage is purchased. Without specialty earthquake coverage, damage to a dwelling and contents as a result of earthquake or other forms of earth movement would be excluded. In order to adequately protect your family and property, it’s important to understand what earthquake insurance is designed to cover in the event of a loss.

"Where can I find Earthquake Insurance?":

• Ask your Insurance Agent/Broker if your home insurance policy offers CA Earthquake coverage, and if so - ask for an in-depth consultation with coverage and deductible options.
• California Earthquake Authority: www.earthquakeauthority.com/Contact / (916) 325-3800
• GeoVera Insurance: www.geovera.com/Earthquake / 1 (800) 324-6020

Did you know:

·        Some insurance carriers do not offer earthquake or sink hole coverage in certain states.

·        Brick Veneer, or Masonry Veneer exterior construction are sometimes excluded or surcharged for property damage depending upon the insurance policy terms and conditions.

·        Depending upon the state, mud slides, rising debris or mud-flow can be considered Flood. Flood is another peril that is not covered under a traditional home policy unless specialty coverage is added.

·        Earth Movement exclusionary language is commonly defined as “shrinking, settling, cracking, bulging, shrinkage or collapse of the ground surrounding or underneath a covered structure”

Earthquake coverage is designed to protect the structural integrity of your home and other structures on your property, and your personal contents in the event of an earthquake. A minor earthquake can cause foundation, plumbing and electrical problems, and these can lead to other serious property damage such as collapse, explosion, fire, extensive water damage, or electrical arcing. Your home policy traditionally covers loss due to fire, water damage, or even explosion, even if the cause of the loss is due to an earthquake. It’s important to note, there are insurance companies that include a policy exclusion rescinding coverage on property and contents damage unless a separate earthquake policy is in place, prior to the loss.

An earthquake can be sudden, at times unnoticed, or relatively minor. At other times, the accumulated energy grows strong enough to cause a large event, with significant after-shocks. If this occurs in a well-populated area, large-scale death, injuries and extensive property damage may result.

Although property insurance policies contain earth movement exclusions, the courts have reviewed coverage when the cause of the earth movement can be attributed to man-made activities, while excluding loss from natural events, i.e., earthquake, related earth sinking or shifting, or mudslide. For example, building damages caused by nearby blasting activities or excavation on an adjacent lot that resulted in settling, sinking, and cracks and separations in the foundations were considered to be man-made activities and held to be covered, despite the earth movement exclusion.

What does elected earthquake coverage protect against?

‘Quake’ coverage insures property against physical loss caused by, contributed to, made worse by, or in any way resulting from earthquake to your covered property at your residence. An earthquake means an earthquake and all related after?shocks occurring within 72 hours of the initial shock.

State-by-state guidelines differ, but there are traditionally percentage deductibles based off of the full replacement cost of one’s dwelling; 1%, 2% or 5%. This deductible applies separately to each coverage amount for your house and other permanent structures.

Before an Earthquake

The following are things you can do to protect yourself, your family and your property in the event of an earthquake. www.ready.gov

·        To begin preparing, you should build an emergency kit and make a family communications plan.

·        Fasten shelves and heavy furniture securely to walls.

·        Fasten heavy items such as pictures and mirrors securely to walls and away from beds, couches and anywhere people sit.

·        Secure your water heater, refrigerator, furnace and gas appliances by strapping them to the wall studs and bolting to the floor.

·        If recommended by your gas company, have an automatic gas shut-off valve installed that is triggered by strong vibrations.

·        Locate safe spots in each room under a sturdy table or against an inside wall. Reinforce this information by moving to these places during each drill.

·        Hold earthquake drills with your family members: Drop, cover and hold on.

After a seismic event:

Insurance companies will typically have a new-business moratorium in place after an earthquake or 'swarm' of earthquakes and after-shocks. When the risk has lowered, most insurance companies will return to evaluating and offering coverage for new policy-holders.

 We can help.

Jason M. Pond, CPRIA - Personal Risk Management

972-715-8703 – Direct  /    972-342-8645 – 24 Hour Mobile

[email protected]  www.swinglecollins.com