With the amount weather related natural catastrophes occurring around the world, it seems like we have forgotten that there have been a number of earthquakes also that have devastated communities,
We were recently reminded of this in Victoria Australia June 2012 where some areas suffered a 5.3 Richter Scale earthquake. Fortunately noone has been killed but there has been some damage.
In May 2012, Italy reported another powerful earthquake that killed at least 15 people and others may be missing in the latest deadly tremor to hit the northern part of the country. This quake had a 5.8 magnitude, rocking one of Italy’s most productive regions.
Thousands of people have been living in tents in the area since a 6.0 magnitude quake devastated towns north of Bologna on May 20. Factories, warehouses and churches collapsed in the mid-morning quake in the Emilia Romagna region.
Let us not forget the city of Christchurch in New Zealand which has been devasted by an Earthquake in 2011 and are still trying to rebuild.
Then not long after this, the significant earthquakes in Japan. We have tended to think only of the Tsunami and Nuclear Radiation but these were caused by the initial and continual earthquakes.
How do you manage such risks?
Earthquakes occur all over the world but there are definitely regions that are more prone than others. However we have had earthquakes in Newcastle which is considered less prone than Adelaide which has only had minor tremors in the past!
Significant improvement in Building codes have enabled structures to withstand earthquakes to a certain extent.
However, the best way is definitely to transfer the risk to insurers. However, the problem with this and with all insurance risks, is that as they are rare close to home, it is difficult to sell this risk as “stand alone” cover. So you find it included within the Fire and Perils section of your business pack policy or automatically included within your Householders policy.
However, you should be aware, a very different excess is applied. For instance the following is an example of the excess in a Business Pack.
The lesser of:
a. $20,000; or
b. an amount equal to 1% of the total Sum Insured for all Your Buildings, Contents and Stock in Trade at the Situation.
Insurers will put other “forgotten” perils within the Fire section of a Business Pack, but not all, so you still need to check that all the risks your business can face is handled appropriately for the business to deal with.
For instance, other insured perils include Lightening, Explosion, Wind, Water leakage, riots and civil commotions, impact damage, molten material, malicious damage or vandalism. Many also include Accidental Damage.
Some insurers will extend to include Flood cover. Do not assume this is automatically covered.
However with any policy document, check also the conditions and exclusions applying to each peril. This is where your Insurance Broker will assist you giving such advice to guide you through the maze that can come with insurance.
Then in addition to this do not forget dealing with any potential under-insurance. It can take years for some regions to rebuild and back to how things were. This includes Business Interruption cover. A six month or one year indemnity period is just not enough.
At least Earthquakes have been taken care of by your Fire or Material Damage insurance cover and this remains the most effective way to manage this risk – transferring it to an insurer. Just make sure you factor in the consequences of such a disaster.