Earthquake Forecast and Coverage and Your California Business Insurance

When it comes to business insurance, California business owners should include earthquake coverage in their policies. According to the Insurance Information Institute, experts predict that the chance of an earthquake measuring 6.7 in the next 30 years is 97% in Southern and 93% in Northern California. Quakes over this magnitude are less likely but still possible – experts forecast a 37% chance of a 7.5 magnitude earthquake in Southern CA.

The 1994 Northridge quake resulted in huge financial losses due to claims paid out massively exceeding premiums collected. The California Earthquake Authority, CEA, was established in 1996 to help avoid a repeat of this problem. The CEA is a mostly privately funded but publicly run entity, designed to build up reserves and provide quake coverage within the State of California.

Coverage for your business includes property, various types of liability, business vehicle, workers compensation and business interruption insurance. Earthquake and flood damage are not normally included and need to be bought as separate policies. With the chance of major earthquakes in California being virtually inevitable, it is essential that when purchasing business insurance, California residents also buy sufficient earthquake coverage through the California Earthquake Authority for protection.