2 ADJUSTINGTODAY. COM A D J U S T I N G T O D A Y Unlike flood insurance, earthquake coverage is available from most private insurance companies rather than from the government — except in California, where homeowners can also obtain coverage from the California Earthquake Authority (CEA). Commercial structures are not eligible for coverage from the CEA. Coverage for the Earthquake Exposure: Commercial Property Coverage Earthquake insurance is expensive and in locations with high or severe exposure to loss by this peril, availability may be somewhat limited. This is true particularly in California and in states near the New Madrid Fault, which include parts of Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri, and Tennessee. In other areas of the country earthquake insurance is generally available but may not be considered necessary, which for some can be unfortunate. As pointed out in the accompanying sidebar, “More About Earthquakes,” in the past 100 years earthquakes have occurred in 39 states. Earthquake damage is excluded in the standard homeowners and commercial property insurance policies of Insurance Services Office (ISO) and the American Association of Insurance Services (AAIS). The following excerpt from the earth movement exclusion (with the concurrent causation language lead-in) is found in the ISO Basic, Broad, and Special Causes of Loss forms CP 10 10 06 07, CP 10 20 06 07, and CP 10 30 06 07 of the commercial property policy.1 B. Exclusions 1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. b. Earth Movement (1) Earthquake, including any earth sinking, rising or shifting related to such event; (2) Landslide, including any earth sinking, rising or shifting related to such event; (3) Mine subsidence, meaning subsidence of a man-made mine, whether or not mining activity has ceased; (4) Earth sinking (other than sinkhole collapse2), rising or shifting including soil conditions which cause settling, cracking or other disarrangement of foundations or other parts of realty. Soil conditions include contraction, expansion, freezing, thawing, erosion, improperly compacted soil and the action of water under the ground surface. But if Earth Movement, as described in b. (1) through (4) above, results in fire or explosion, we will pay for the loss or damage caused by that fire or explosion. (5) Volcanic eruption, explosion or effusion. But if volcanic eruption, explosion or effusion results in fire, building glass breakage or Volcanic Action, we will pay for the loss or damage caused by that fire, building glass breakage or Volcanic Action. The AAIS exclusion reads as follows: b. Earth Movement or Volcanic Eruption —We do not cover loss caused by any earth movement (other than sinkhole collapse) or caused by eruption, explosion, or effusion of a volcano.
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