Tuesday, September 10, 2013

On Shaky Ground

“Earthquakes” are not something that we generally associate with the state of Georgia.  However, earthquakes do occur in our area - and also regularly occur in 38 other states.  The initial thought when contemplating earth movement is its impact on buildings.  However, we also need to be mindful of the supporting utility services that provide gas, telephone, and electricity to those buildings. Properties also can sustain significant damage to equipment, windows, partitions, ceilings, and lighting fixtures. Because Georgia earthquakes typically rate relatively low on the Richter scale, these secondary items can be more likely to pose danger than an actual building collapse.
Associations containing multi-story buildings are natural candidates for coverage, and contributing factors - such as tunnels and storm drain systems located beneath buildings - need to be discussed with the association's insurance broker to address realistic scenarios.
Federal disaster assistance (usually in the form of loans or grants) is only available if the damage is widespread, very serious, and the area must be declared a disaster zone by FEMA (Federal Emergency Management Agency).
Standard insurance policies do not generally cover damage directly caused by earthquakes.  You can often obtain earthquake coverage by adding an endorsement to the Association’s policy. The Association also has the option of exploring a stand-alone policy, dedicated specifically to an earthquake event. As with any type of insurance, associations need to check with their insurance agents to ensure that the coverage realistically meets their exposures.

It’s important to know how “earthquake” is being defined to ensure proper coverage. Although one insurance company may define “earthquake” as an occurrence being caused by seismic activity, often earthquakes or earth movement definitions exclude similar events such:
  1. Any earthquake or volcanic eruption that begins before the inception of the insurance;
  2. Earth movement (other than coverage  provided  by  this  optional coverage), such as landslide, or earth sinking, rising or shifting;
  3. Fire, explosion (other than volcanic explosion), tidal wave, tsunami, flood, surface water, water which backs up or overflows from a sewer, drain or sump, water below the surface of the ground (including that which flows, leaks or seeps on or into covered property), mudslide or mudflow, release of water impounded by a dam, even if attributable to an earthquake or volcanic eruption.
The Association should review earthquake coverage with its insurance agent when determining an acceptable level of risk and weigh the costs to obtain the additional coverage. 

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