Like Flood Insurance, Earthquake, Volcano and Mudslides are not included in the vast majority of insurance contracts written today. This coverage will be picked up via Endorsement (or for the old folks a “Rider”). For us in Michigan, this often overlooked coverage option is available from most commercial carriers. Earthquake coverage is also available from many personal insurance carriers, but this blog will focus on the commercial area. ISO Commercial Risk Services, which provides “coverage forms” for many of the approved Michigan carriers has a specific form which is CP 10 40 06.
Seismic Activity in Michigan is not necessarily up over the past couple of years, however we have “felt” neighboring states (Ohio, Illinois and Pennsylvania) increased activity. And, of course, many of you reading this likely know that one of these earthquakes come from the New Madrid Fault. One of the most powerful earthquakes in the history of the US emanated from the New Madrid fault in the Midwest. As recent as 1947 Michigan did experience a Magnitude 4.6 earthquake that caused widespread structural damage centered southeast of Kalamazoo and including the areas of Bronson, Coldwater, Colon, Matteson Lake. This earthquake as recorded by USGS (US Geological Survey) caused chimney damage, window and plaster damage as well as brick cornices coming down.
The good news however is since these events are somewhat rare in Michigan the cost for adding the coverage is relatively low.
Common ways that Carriers offer Earthquake insurance is via a sublimit. For Instance, $500,000 sublimit may be offered as an option on a Multimillion dollar structure. This option is OK for starters, but it is advised that you ask your agent to ask for the full property limit to be offered as an option. If full limits are not available, work with your agent for higher sublimit options. If your agent or carrier is not able to offer higher limits inquire about a Difference in Conditions (DOC) policy that can provide higher limits on top of your primary property policy.
Be prepared for a deductible that will likely be proposed as a percentage of damage. These can range from 1- to 10%. Also make sure that the coverage that you choose includes business personal property and business income to follow the rest of your insurance program.
Has your agent discussed Earthquake Insurance with you?
Joe Buick | vice president
Kapnick Insurance Group | Strength. Knowledge. Direction.
333 Industrial Dr. | Adrian, MI 49221 | www.kapnick.com
D 517.266.6574 | F 517.263.6658 | P 888.263.4656 x1170