The Number

Nearly a quarter century after the shaking stopped, the Northridge earthquake remains the most costly quake in U.S. history based on insurance claims. A study last year by German reinsurance carrier Munich Re found the 1994 temblor resulted in claims worth $44 billion. Globally, Northridge ranked third behind 2011 earthquakes in Japan and New Zealand. Janet Ruiz, California representative of the Insurance Information Institute in New York, said back in the 1990s, earthquake coverage was part of regular homeowners polices, often as a rider or endorsement. Since then, the market has changed dramatically. Commercial insurance carriers found it difficult to offer earthquake policies given the potentially catastrophic losses. In response, lawmakers created the California Earthquake Authority, a publicly managed nonprofit that sells coverage. According to the CEA website, its creation stemmed from the costs of the Northridge quake. “CEA was able to broaden coverage and, at the same time, decrease premiums,” Ruiz said. “They are now up to 1 million policies in California. They offer personal, residential coverage – this is not for commercial businesses.” Ruiz referred to the CEA website, which features a premium calculator based on insurance carrier, address, type of construction, deductible amounts and other factors. Businesses can buy earthquake insurance, interruption insurance and supply chain coverage from their regular insurance carrier. Ruiz pointed out that while wildfires usually damage the edges of cities, earthquakes can level broad swaths of commercial buildings. “The risks are greater in some urban areas, and the larger population and infrastructure impacted is huge,” she said. “The infrastructure can get damaged and it’s difficult to get a business going again if the whole area doesn’t have roads, for example.” – Joel Russell