Earthquakes in California are regular occurrences; after all, the state is located on many faults, including the great San Andreas Fault. Each one of those many faults is capable of producing devastatingly powerful earthquakes. Many scientists are saying that the West Coast is well overdue for a mighty earthquake that could be as strong as 8 or 9 on the Richter scale. Since most of the state is located on or near so many fault lines, most people think that California residents and commercial property owners carry earthquake insurance. Earthquake insurance is incredibly expensive, however, and only 12% of those who own residential or community property in California can manage to get affordable earthquake insurance.
Since they are the most expensive disaster from which to recover, earthquakes will always be a worry for California residents. Earthquake insurance in California comes at a high price, therefore many commercial building owners simply choose not to take on this extra expense, especially when the economy is sluggish. If you are fortunate enough to be able to get earthquake insurance, the deductibles are typically quite high. Even then, the amount of coverage frequently does not fully cover the possible costs of damage or total property loss.
If you live in the Bay Area of northern California, there are two important points to consider, especially if you are thinking about earthquake insurance for your commercial property:
- Buildings that are older than 20 years are most likely not up to the most recent and more stringent building codes.
- You are still responsible to pay any remaining balance on the mortgage, even if the property is damaged or completely demolished.
Many commercial property owners look for a way to get accepted for coverage with affordable rates. Perhaps you have looked into getting financing on your commercial property and have heard about the importance of building safety and the PML (Probable Maximum Loss) rating for lenders. Most banks and insurance companies are very concerned with minimizing the amount of risk they carry. If you have a commercial property that is more than 20 years old, it is very possible that the building is not currently sturdy enough to withstand the force of a strong earthquake. A considerable number of lenders, who require a PML under 20%, are usually satisfied when a thorough earthquake retrofit has been completed to reinforce the building. An earthquake retrofit assures the lender that necessary reinforcements have been done to reduce the chances of major damage and devastation that would probably result in the property owner defaulting on the loan.
It is entirely possible that in the future, insurance companies may choose not to write coverage for earthquakes due to past catastrophic losses. Rates have increased multiple times in the past ten years and policy denial is often the norm today. Unfortunately, many commercial property owners in the Bay Area are carrying an excessively high PML on their older buildings. These older commercial properties were built using designs and methods that experts now expect to fail if a powerful quake occurs. Building engineers and architects agree that an earthquake retrofit is one of the best ways to protect an older property, thus making earthquake insurance possible and more affordable.
If you want to find out if an earthquake retrofit is a solid investment and the best way to lower the cost of earthquake insurance, you will want to get a retrofit quote. Saunders Commercial Seismic Retrofit offers property owners an insurance quote based on present and after-retrofitting values so clients can easily determine their return on investment. By partnering with a number of insurance providers, Saunders Commercial Seismic Retrofit can easily demonstrate the potential ROI. In the end, it is easy to see that it is less expensive to earthquake retrofit a structure prior to an earthquake than to fix costly damages afterward. For more information on the best ways to get affordable earthquake insurance and to get a quote for an earthquake retrofit, call Saunders Commercial Seismic Retrofit today.