It’s perhaps the most instantaneously unnerving and terrifying natural event you can experience. When an earthquake strikes, there is no warning. There’s no storm track to follow. There’s no battening down the hatches. There’s no time to evacuate. And you can’t outrun it.
Somewhere in the world, an earthquake will occur today. According to the U.S. Geological Survey, several million earthquakes occur every year around the world, with about 20,000 occurring in the U.S. Most are small and only detectable using the most sensitive instruments. At the far end of the scale, approximately 700 earthquakes a year are big enough to cause serious property damage, injury, and death.
The fact is, nearly half of all Americans live in areas prone to potentially damaging earthquakes. Since 1900, there have been earthquakes in 39 states, with damage in all 50 states. Naturally, Alaska and California top the list. On the other end of the spectrum, Florida and North Dakota have the least number of earthquakes.
Texas probably isn’t the first state that comes to mind when you think about major fault lines and earthquake zones. But it might surprise you to know that earthquakes in Texas are becoming more common. Central Texas has one major fault line running through it, and Houston, Dallas and the Texas panhandle are all near other faults. But one reason quakes are becoming more common in the Lone Star State has to do with activity in the energy industries. Fracking, mining and building dams have all been attributed to earthquakes caused by human activity.
If you run a business in Texas, chances are earthquake insurance isn’t at the top of your priorities. But is your business near an earthquake fault zone, an oil and gas operation or a mining operation? If so, you might want to take a second look at earthquake coverage.
Don’t Make this Potentially Costly Mistake
Don’t make the mistake of thinking your standard commercial property or business owners policy will cover you if an earthquake strikes your area and causes damage to your business. They won’t.
To fully protect your business, you need earthquake insurance. Here are two ways to get it:
- As an endorsement. You may be able to purchase earthquake coverage as an endorsement to your standard business owners policy. The endorsement will cover structural damage to your building and damage to your property.
- As a separate policy. You can also request a separate earthquake insurance policy. This makes sense for larger businesses that want to save on overall premiums for their business insurance coverage.
Is Earthquake Insurance Expensive?
Premiums vary significantly depending on your location, with premiums being as much as 10 times higher in western states than in eastern states. According to the Insurance Information Institute, premiums run 30 to 60 cents per $1,000 in the east, while similar coverage will run three to 15 dollars per $1,000 in the west. Earthquake insurance generally has a percentage deductible anywhere from 10 to 15 percent. So, if your business suffers an earthquake loss of $1 million, you would be responsible for the first $100,000 to $150,000.
Some commercial auto and workers’ compensation policies also cover loss, damage or injury from earthquakes. There might even be coverage under a business interruption policy, but you’ll need to check with your insurer.
A Few Ways to Get Prepared
Don’t forget – September is National Preparedness Month and this October 15 is International ShakeOut Day – a great time to hold drills and practice earthquake safety. That includes The Great Texas Shakeout.
Ready to talk about your earthquake insurance needs? Contact our risk management professionals today.