A D J U S T I N G T O D A Y CORPORATE OFF ICE 126 Business Park Drive Utica, New York 13502 800.382.2468 Outside U.S. (315) 797.3035 Fax: (315) 272.2054 Editor@AdjustingToday.com WEB ADDRESSES www.AdjustersInternational.com www.AdjustingToday.com PUBL ISHER Ronald A. Cuccaro, SPPA EDI TOR Sheila E. Salvatore ADJUSTING TODAY is published as a public service by Adjusters International, Inc. It is provided for general information and is not intended to replace professional insurance, legal and/or financial advice for specific cases. AT11 3041 PRINTED ON RECYCLED PAPER Copyright © 2011 Adjusters International, Inc. Adjusters International ® and the AI logo are registered trademarks of Adjusters International, Inc. Robert Prahl has more than 30 years of experience in the insurance business, primarily in claims and claims training. He began his career as an adjuster in the New York metropolitan area and eventually became a claims manager and claims training director. He has written extensively on insurance issues, having authored two text books for the Insurance Institute of America and previously served as a columnist for Rough Notes magazine, an insurance trade publication. Robert J. Prahl, CPCU Adjusting Today on the Web — www.AdjustingToday.com View our entire catalog of back issues, download PDF versions, subscribe and contact the editor Follow Adjusting Today on Facebook & Twitter: Facebook.com/AdjustersInternational Twitter.com/AdjustingToday The potential cost of earthquakes continues to grow due to urban development in seismically active areas, as well as the increasing vulnerability of older buildings in these areas —many of which were not built or have not been upgraded to current building codes. Yet insurance coverage in place to protect against these costs is often lacking. After a major quake strikes there is typically an increase in coverage purchased, but as memory of the disaster fades, the coverage is often not renewed. According to the Insurance Information Institute, in 2004 only about 57 percent of Missouri homeowners who live in areas near the New Madrid Fault and about 40 percent statewide bought earthquake coverage. Of the $20 billion in property damage done by the Northridge quake in 1994, only $12.5 billion was covered by insurance. Across California, 30 percent of homeowners purchased earthquake insurance in 1996; one decade later, that number had fallen to 12 percent, even though the risk remained the same.5 Measuring Earthquakes The Richter scale, developed by Charles Richter in the 1930s, was long viewed as the standard for measuring the intensity of earthquakes, particularly in comparing one quake to another. In recent years, however, the Richter scale has been superseded by the Moment Magnitude scale. Both scales measure the magnitude of a quake by the seismic energy released and the readings generated by the two can be very similar, but the Moment Magnitude scale uses newer technologies to produce a more accurate measurement of a specific earthquake event. Today, news reports about earthquakes often omit references to either scale and indicate the magnitude number only. The truth remains: the higher the number, the more severe the quake. ____________________ 1Christopher Tritto, “Are We Prepared for Our Own Disaster?” St. Louis Business Journal, Sept. 9, 2005. 2www.iii.org/insurance_topics/, Natural Disasters, Earthquakes; Risk and Insurance Issues. 3Ibid, from Insurance Information Institute (III) article, citing a 2009 study by AIR Worldwide. 4Ibid, from Insurance Information Institute (III) article. 5Gregory Boop, “Insure Your Business Against Earthquake Damage,” About.com Guide.
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