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How Does Commercial Earthquake Insurance Coverage Work?

While earthquakes in California aren’t as common as floods and fires, the state is particularly vulnerable. Three out of the five most deadly disasters in the Golden State since 1950 have been earthquakes, and it is only a matter of time before “the big one” hits. While there isn’t anything a business owner in the state can do to protect a local business from earthquake damage, taking out earthquake coverage for the business can make the rebuilding process much faster and easier than it would have been otherwise. Grand Mutual Insurance Services (GMIS) offers combined earthquake/flood commercial insurance policies for businesses of all sizes and types in the Golden State to ensure local business owners aren’t financially devastated if a business and its inventory are damaged in a quake.

What Does Commercial Earthquake Insurance Cover?

Earthquake insurance covers building damage caused by a quake. This includes not only repair costs but also demolition costs if the building cannot be salvaged. If the building must be improved or renovated to meet requirements laid out by local laws or ordinances, earthquake coverage will provide compensation for these costs. Earthquake coverage also covers damage caused by flooding or fires caused as a direct result of the quake.

Furthermore, this form of coverage will also provide compensation to cover quake-related damage to inventory and business supplies such as machinery and electronic devices. Some insurance providers, such as Grand Mutual Insurance Services, also cover loss of income that will almost certainly occur if one’s business and/or inventory has been damaged. If the earthquake insurance policy includes business interruption insurance coverage, a business owner will also be covered for payroll expenses, taxes, and debt.

What Isn’t Covered by Commercial Earthquake Insurance?

Commercial earthquake insurance won’t provide compensation until damage has exceeded the policy’s deductible. This is why it’s important to choose a deductible with care, as raising the deductible to keep monthly expenses low can have outsize consequences when an earthquake occurs. At the same time, a business owner should be aware that there are some forms of earthquake-related damage that won’t be covered by a commercial earthquake insurance policy.

Earthquake polices don’t cover quakes caused by fracking, as fracking-related earthquakes are man-made quakes rather than natural occurrences. Fracking occurs in ten counties in the state of California and a business located close to an area where fracking takes place should take measures to protect the premises from potential damage. Earthquake coverage also does not provide compensation for business vehicles damaged by a quake. For coverage of this nature, one would need to take out a comprehensive commercial vehicle insurance plan.

How Much Does Commercial Earthquake Insurance Coverage Cost?

The cost of commercial earthquake insurance coverage varies depending on a multitude of factors. The company one works with is an important factor, as some insurers offer more affordable coverage options than others. The deductible one sets for the policy will impact the price; a high deductible makes earthquake insurance more affordable than it would be otherwise but also requires business owners to pay for many post-earthquake repairs out of pocket before compensation becomes available.

Business structure is also a significant factor that impacts the cost of earthquake insurance coverage. Structures such as older concrete buildings and soft-story apartments are particularly vulnerable and thus may be costlier to insure than newer structures. Insurers will also want to know about the buildings foundation and even take soil samples before providing a price estimate on a policy. Location is also naturally a huge factor; the closer a business is to a fault line, the more it will cost to purchase earthquake insurance. Generally speaking, serious earthquakes are most likely to occur on California’s coastline; the further west one moves, the less at risk one is and the cheaper coverage becomes.

It’s easy to become accustomed to living in an area at high risks of earthquakes without thinking about earthquake-related damage until an earthquake actually hits. However, as the United States Geological Survey rightly points out, the potential for bigger and more damaging quakes in the West Coast area is higher than previously believed. A California-based business owner who wants to protect his or her business from ruin would do well to not only secure the business and its inventory to minimize quake-related damage but also take out earthquake coverage that will provide needed compensation when a quake happens. Grand Mutual Insurance Services offers some great earthquake insurance coverage options for businesses of all sizes and from all industries, and the firm has a track record for providing efficient service along with great customer service that will make it easy for a person to pick the right form of coverage and claim compensation should the need arise.

Have questions or need a quote?

Call our GMIS team at 888.732.5994 or email us at [email protected] to discuss creating a customized policy plan to protect you and what you’ve worked so hard to build.