• About Us |
  • Follow Us: 
theinsurance411.com logo

The Insurance 411

What you need to know about insurance

  • Essential Property and Liability Insurance
    • All Property & Liability Topics
    • Business Income Insurance
    • General and Auto Liability
  • Specialized Insurance Policies
    • All Specialized Prop & Liability Topics
    • Credit Risk
    • Cyber Insurance
    • Directors & Officers
    • Employment Practices Liability
    • Environmental Liability
    • Professional Liability
    • Surety
    • The Basics
  • Workers’ Compensation Insurance
    • All Workers’ Comp Topics
    • Claims Management
    • Controlling Costs
    • Loss Prevention
    • Regulations
    • The WC Basics
  • Employee Benefits
    • All Employee Benefit Topics
    • Affordable Care Act – “ObamaCare”
    • Benefits Management & Compliance
    • COBRA
    • Dental Insurance
    • Group Disability Insurance
    • Retirement Plans
    • Vision Plans
    • Voluntary Benefits
  • Essential Property and Liability Insurance
    • All Property & Liability Topics
    • Business Income Insurance
    • General and Auto Liability
  • Specialized Insurance Policies
    • All Specialized Prop & Liability Topics
    • Credit Risk
    • Cyber Insurance
    • Directors & Officers
    • Employment Practices Liability
    • Environmental Liability
    • Professional Liability
    • Surety
    • The Basics
  • Workers’ Compensation Insurance
    • All Workers’ Comp Topics
    • Claims Management
    • Controlling Costs
    • Loss Prevention
    • Regulations
    • The WC Basics
  • Employee Benefits
    • All Employee Benefit Topics
    • Affordable Care Act – “ObamaCare”
    • Benefits Management & Compliance
    • COBRA
    • Dental Insurance
    • Group Disability Insurance
    • Retirement Plans
    • Vision Plans
    • Voluntary Benefits
Top Business 411 Stories
  • | Marijuana and Workers Compensation
  • | Employee Dental Insurance for Every Budget
  • | How Do Your Healthcare Providers Rate?
  • | How to Get Sued By Your Employees in 10 Easy Steps

Don’t Get Shaken by Lack of Earthquake Coverage

January 1, 2017 by The Insurance 411Leave a Comment

When you think of earthquakes, you probably think of California, or maybe coastal areas of the Pacific Northwest. But 90 percent of the U.S. population lives in earthquake-prone areas. And a recent study by the U.S. Geological Survey found that 7 million people now face the risk of human-caused earthquakes.

Earthhquake insurance


Induced earthquakes are triggered by human activities, particularly the disposal of wastewater from oil and gas production.

By including human-induced events, our assessment of earthquake hazards has significantly increased in parts of the U.S.,” said Mark Petersen, chief of the USGS National Seismic Hazard Mapping Project. “This research also shows that much more of the nation faces a significant chance of having damaging earthquakes over the next year, whether natural or human-induced.”

Induced earthquakes are triggered by human activities, particularly the disposal of wastewater from oil and gas production. Wastewater can be disposed of by injecting it into deep underground wells, below aquifers that provide drinking water. Injecting fluid underground can induce earthquakes, a fact that was established decades ago by USGS scientists. This process increases the fluid pressure within fault zones, essentially loosening them and making them more likely to fail in an earthquake. When injected with fluids, even faults that have not moved in historical times can be made to slip and cause an earthquake if conditions underground are appropriate.

Six states face the most significant hazards from induced seismicity. In order from highest to lowest potential hazard, they are: Oklahoma, Kansas, Texas, Colorado, New Mexico and Arkansas. Oklahoma and Texas have the largest populations exposed to induced earthquakes.

How much of an earthquake risk does your business have? To find out, go to the U.S. Geological Survey’s page at https://earthquake.usgs.gov/earthquakes/byregion/ and click on your state to find an earthquake hazard map. Please note that these maps are based on 2014 data and do not include the most recent information on induced earthquakes. For information on induced earthquakes, see the map at https://www2.usgs.gov/blogs/features/usgs_top_story/induced-earthquakes-raise-chances-of-damaging-shaking-in-2016.

What Should You Do if You’re Located in a Higher-Risk Area?

Standard business property policies exclude coverage for “earth movement,” which includes earthquakes. You can add earthquake coverage to your insurance program in one of the following ways:

Standalone policies: Many insurers write commercial earthquake insurance policies. Most will cover buildings, business personal property, loss of business income, sprinkler leakage due to quake, and “ordinance or law coverage,” which protects you from increased costs of construction when you must bring existing structures up to current codes. You can find a list of insurance carriers admitted to do business in the state through the state insurance department, or simply contact us.

Policy endorsements: You can buy an endorsement to add coverage to an underlying commercial property policy. ISO form CP 10 40 will add earthquake and volcanic eruption to the causes of loss your commercial property policy covers. It also covers sprinkler leakage due to earthquake, but excludes coverage for fire, explosion (except for volcanic explosions), landslide, mudslide or mudflow, flood or tidal wave, even if caused by an earthquake or volcanic eruption.

As with your property policy, this endorsement has a coinsurance provision. This requires you to carry insurance on a specified percentage of the property’s value. Most policies have a coinsurance percentage of 80, 90 or 100 percent. If your insurance limits are less than the coinsurance amount when a loss occurs, the insurer will penalize you proportionately when it pays covered claims.

ISO form CP 10 45 covers the same causes of loss as the CP 10 40, but places a sub-
limit on coverage. This means it will cap claim payments for covered earthquake and volcanic eruption losses with a lower limit than other hazards covered by the policy, such as fire. Coverage under this type of endorsement usually costs less.

DIC policies: Some larger companies use DIC policies to insure earthquake exposures. DIC, or difference in conditions, policies are non-standard policies an underwriter can tailor to fill coverage gaps left by exclusions in other property policies. They generally exclude coverage for perils covered by standard property forms, such as fire, windstorm, hail, smoke, explosion, riot, civil commotion, vehicle and aircraft collision, vandalism and malicious mischief and sprinkler leakage. They also usually exclude damage from war and nuclear perils, which are considered too catastrophic to be underwritten.

DIC policies are usually written for a specific limit, such as $5 million or $10 million. Unlike most property policies, most DIC policies have no coinsurance provision, which means you do not have to purchase coverage for a specified percentage of the property’s full value.

Because DIC policies fill coverage gaps, your broker should coordinate your DIC policy with your other policies. Most DIC policies require the insured to keep the “underlying” property policies in effect for the entire term of the DIC policy.

Filed Under: Specialized Insurance Policies

[wp_ad_camp_3]

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Read more ⤵

  • Business Insurance
  • Personal Insurance
  • Newest Business Articles
  • All Business Topics
  • Recommended Articles
    • Ways to Make Childcare Costs a Little More Affordable
    • Self Funding 101 For Employers
    • Weight Discrimination on the Rise
    • Understanding Consumer-Driven Health Plans

The Daily Blog

Directory Ad for 411sidebar

Register for Weekly Business Insurance Article Updates

  • This field is for validation purposes and should be left unchanged.

Most Popular

  • Ways to Make Childcare Costs a Little More Affordable
  • Title VII Non-discrimination Protections Apply to LBGTQ Individuals
  • Drones in the Workplace
  • Why Stress Is a Work Safety Problem

Attention Insurance Agents

If you are looking for quality insurance content for your own customized newsletter, please visit Smarts Publishing:
https://smartspublishing.com

Business Insurance 411

  • Essential Property and Liability
  • Specialized Policies
  • Workers’ Compensation
  • Employee Benefits

Personal Insurance 411

  • Homeowners Insurance
  • Auto Insurance
  • Life & Health Insurance
  • Personal Insurance Basics

Read More

  • Business 411 Articles
  • Personal 411 Articles
  • Top Stories Business
  • Top Stories Personal

The Daily Blog

  • Newest Business Articles
  • Newest Personal Articles
  • Most Popular Business
  • Most Popular Personal

Copyright ©2019 TheInsurance411.com

  • Home
  • Terms of Use
  • Privacy Policy
  • About Us
  • Contact Us