Earthquake Insurance
Earthquake insurance covers damage to buildings and business personal property caused by seismic events. Standard commercial property insurance policies do not cover earthquake damage — it is explicitly excluded as a covered cause of loss under most commercial forms. Businesses that sustain significant structural damage or equipment losses in an earthquake without a separate earthquake policy face those costs entirely on their own.
What Earthquake Insurance Covers
A commercial earthquake policy typically covers direct physical damage to insured property caused by an earthquake and its aftershocks, including:
- Building damage — structural damage to buildings and improvements, including foundations, walls, and roofing systems
- Business personal property — damage to equipment, inventory, furnishings, and other contents
- Business income loss — revenue lost during the period required to repair or replace damaged property, if this coverage is included
- Additional coverages — some policies include coverage for fire following earthquake, which is a significant cause of loss in major seismic events, and for damage caused by earth movement associated with the quake
Deductibles and Policy Structure
Earthquake policies typically carry a percentage-based deductible rather than a flat dollar deductible. This percentage — often ranging from 2% to 20% of the insured value of the property — applies separately from the deductibles on your standard property policy. For a building with significant insured value, the earthquake deductible alone can represent a substantial out-of-pocket cost, which is why understanding the deductible structure is a critical part of evaluating any earthquake policy.
Industry Considerations
Earthquake risk is often misunderstood as being limited to the West Coast. In reality, significant seismic zones exist across the southeastern United States, including areas of Georgia, Tennessee, and the broader New Madrid Seismic Zone that affects a wide region of the central and southeastern U.S. Businesses that own buildings, operate from facilities with significant equipment investment, or depend on real property that would be difficult or expensive to restore after a seismic event should evaluate whether earthquake coverage belongs in their program. The right approach depends on your location, the construction type and age of your buildings, your property values, and your tolerance for uninsured risk. Etowah Insurance Group can help you assess the exposure and find appropriate coverage for your situation.
