Building Owners » Earthquake

Earthquake Insurance: Frequently Asked Questions


Question: Why do I need earthquake insurance?

Answer: California and the Pacific Northwest are two of the most seismically active areas in the world, and although earthquakes are a real and present danger, the typical Homeowners Association policy does not cover earthquake damage.


Question: I’ve heard that if we have a massive Earthquake in southern California, none of the insurance companies will be around to pay the claim?

Answer: According to the Insurance Information Institute, the Northridge Earthquake caused some $16.8 billion in damages. This is the most insured damage resulting from a catastrophic earthquake in U. S. history – and yet no insurance company went insolvent as a result. More recently, the terrorist attacks of September 11, 2001 have already resulted in claims in excess of $38.2 billion (with the resulting claims expected to even be higher), and yet there still have been no insurance company insolvencies.

Technical advances since the Northridge Earthquake have been made in the area of computer modeling which assist insurance companies by helping them identify and assess their projected exposure on known fault lines. These improvements further reduce the potential of insurance companies taking on more exposure in significant regions than they have the ability to handle.

Question: What is Difference in Conditions?

Answer: Difference in Conditions (DIC) is a broader form of coverage which serves the basic purpose of filling in the gaps left by the commercial property insurance. One such gap is loss from earth movement (a.k.a. EARTHQUAKE). Most of the earthquake policies we write are DIC policies.

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