Sometimes manufactures only consider obvious perils when they review their property insurance. For example, in the Midwest, when it comes to ranking the probability of damage from specific perils, earthquakes don’t jump to the front of the line. In fact, the last recorded earthquake in WI was on March 22nd 2015 in Clintonville, WI. The 1.5 magnitude earthquake was barely noticeable, but did crack a few foundations.
Why should this seemingly minor event concern manufacturers when it comes to purchasing insurance?
Because you don’t have to have substantial damage to plant and equipment to experience a major earthquake loss.
The same earthquake exclusion in a property policy coverage applies to the business income coverage part. That means to the naked eye your facility may look physically unchanged after even a tiny earthquake, but if the facility is structurally unsound or at least unsafe to the point building inspectors forbid entry into the facility, you could face a major loss.
If that were to occur, you would need to have earthquake coverage in place to repair the potential damage. In this case more importantly, you will need earthquake coverage for the business interruption loss. Depending on the length of time you are shut down, what at first seemed like an interesting factoid just turned out to be a major headache. There are also other crevices too close within the scope of the earthquake peril.
For further clarification on this topic, feel free to contact one of the agents in Hausmann-Johnson’s Manufacturing Industry Group:
- Jim Ahearn – firstname.lastname@example.org
- John Erikson – email@example.com
- Tim Hausmann – firstname.lastname@example.org
- Scott Hausmann – email@example.com
- Erik Hausmann – firstname.lastname@example.org
- Kyle Von Ruden – email@example.com