Earthquake Insurance: What's Your Exposure

Adjusters International Disaster Recovery Consulting

Earthquake Insurance: What’s Your Exposure?

By Robert J. Prahl, CPCU

Did you know that while the United States experiences only two percent of the world’s earthquakes, some 90 percent of its population lives in seismically active areas? According to the U.S. Geological Survey, there is a 70 percent probability that an earthquake of magnitude 6.7 or larger will strike the San Francisco Bay area over the next 30 years. (For statistical information about earthquake exposures in other regions of the country, see sidebar, titled “More About Earthquakes.”)

Earthquake insurance provides protection from the shaking and cracking that can destroy buildings and personal possessions. However, coverage for related damages that may result from earthquakes, such as fire and water damage, is provided by standard property insurance.


As this issue of Adjusting Today was being prepared, the earthquake and resulting tsunami of March 2011 struck Japan. That concurrence put an exclamation point on what already was the theme of this edition: earthquake coverage is an important, but too often lacking component of an adequate business or personal insurance program.

Although excluded in standard commercial and homeowners policies, earthquake protection is available by endorsement. Insurance expert Robert Prahl details this availability in our lead article. Then, on a closely related subject, he takes an insightful look at how the courts have interpreted policy language in several earth-movement claims.

Rounding out this issue is a sidebar offering some interesting facts about earthquakes in the United States.

As evidenced by the Japan disaster, however, regardless of where they strike, earthquakes can have international ramifications. They can affect the operations — and therefore the insurance needs — of firms thousands of miles away. One such need, for contingent business interruption coverage, was demonstrated to many American companies by the Japan experience. Adjusters International quickly provided important information on this coverage in two electronic editions of Adjusting Today that continue to be available on our website,

We invite you to read them as timely companions to this regular edition.

Sheila E. Salvatore Editor