With the vigorous shaking in Southern California over the past few days, including the mid-morning, main event Fourth of July quake (6.4), and a stronger, magnitude 7.1 aftershock the evening of July 5, it’s a good time to review your client’s insurance coverages for one of the more frequently overlooked, but costly aspects of quake damage to property.
EQSL: The Hidden Cost of Quakes
Media attention tends to focus on dramatic scenes of collapsed buildings, structural damage, cracking, and content upheaval. More typically, businesses may suffer property damage after a quake shakes a building enough to activate or damage indoor sprinklers, which in turn spray water, wreaking havoc on office fixtures, machinery and inventory. The resulting damage from water sprinklers can often far exceed the damage to the structure itself.
Indeed, this was a major component of the total losses paid out by commercial insurance companies following the Northridge Earthquake in 1994. Reports from FEMA following the Napa quake in 2014 found similarly a number of buildings suffered water damage from broken sprinklers. Many commercial insurers report they paid out more losses due to sprinkler leakage than earthquake shake damage due to the extent of damage and the manner in which the coverage is often written (low deductibles and high limits of coverage).
• Determine whether your client’s fire sprinkler systems (in areas subjected to seismic activity, meaning pretty much throughout the western US,) are provided with a means to protect them from damage. The ability of seismic protection to keep a sprinkler system operational after an earthquake is spelled out via National Fire Protection Association (NFPA) standards.
• Review your clients’ property coverages and make sure they have the correct type of insurance.
For example, if your client owns a commercial building or is a tenant in a commercial building equipped with a sprinkler system for fire suppression, they may not have coverage if there is damage done to the building or the contents inside the building for water damage caused by either a leak in the system or damage to a sprinkler pipe. Standard commercial property insurance will not cover this type of damage, leaving many affected businesses on the short end of the stick should they suffer sprinkler damage after an earthquake. Adding EQSL or a sprinkler leakage endorsement would provide coverage for the building and/or contents inside the building should the sprinkler system leak due to an earthquake or accident. It would also provide coverage should the sprinklers become damaged.
As an approved broker for ComStar, Novita’s property package from ComStar automatically provides coverage for EQSL each and every time. Contact us today to discuss your clients’ needs and we will put together a unique protection proposal for you and your client.