PRODUCT: Quake Assist
COMPANIES: Arrowhead General Insurance Agency, Inc., underwritten by Falls Lake National Insurance Company
BEST RATING: A (Excellent), Size X
AVAILABILITY: Coverage is available to all licensed retail and wholesale agents and brokers who have a producer agreement with Arrowhead.
FOCUS: In 1994, the Northridge earthquake occurred along a previously undiscovered blind thrust fault in the San Fernando Valley, thrashing a Los Angeles suburb with a 10- to 20-second shock that registered a magnitude of 6.7 and delivered shockwaves out as far away as Las Vegas.
The earthquake killed dozens and caused widespread damage to buildings, freeways and infrastructure that cost upwards of $25 billion. According to the Earthquake Country Alliance, over 80,000 residential and commercial units were destroyed.
An earthquake doesn’t have to be as devastating as Northridge to have serious repercussions for commercial insureds. After an earthquake event, “businesses may be forced to close whether or not they incur damage to their property and premises,” explains Craig Justice, agency consultant, Arrowhead General Insurance Agency.
Why? Perhaps the premises are inaccessible due to road closures or building, sidewalk and parking issues. Or perhaps crucial supplies are undeliverable, utilities are out or employees can’t come to work.
Quake Assist is an innovative new standalone commercial business interruption insurance product from Arrowhead “that protects business owners from financial losses from business closure due to an earthquake,” Justice says. “It includes coverage for lost income and ongoing expenses” so that insureds can “maintain cash flow when the business is closed.”
Whereas other earthquake products require property damage to occur before coverage applies, with Quake Assist, coverage is triggered after an earthquake of magnitude 4.0 or higher that causes a business to close for any reason—even if no property damage occurs.
Arrowhead has offered both commercial and residential earthquake insurance products in California for over 20 years and is “one of the largest distributors of earthquake insurance in California,” Justice adds.
COVERAGE DETAILS: The policy provides business interruption coverage, including business income and expense protection, for business closure due to an earthquake with a magnitude of 4.0 or greater, as determined by the U.S. Geological Survey.
Daily limit of insurance coverage is available up to 90 days of business of business closure. Annual aggregate limit is $1 million. Waiting period is two to five days.
UNDERWRITING: Rates are based on geographic location, construction type and occupancy, as well as the limits and waiting period selected. Immediate online quoting and binding is available at arrowheadexchange.com. Minimum earned premium is 25% of annual premium. Direct billing with full payment and installment plans available.
MINIMUM PREMIUM: N/A.
TARGET: Small to midsize businesses with two to 100 employees that are subject to financial loss exposure due to business closure after an earthquake.
Target industries include professional services, retail and mercantile, restaurants, wholesale trade, real estate, health care, personal and repair services, and entertainment and recreation. Ineligible risks include:
- Businesses located in unreinforced masonry buildings or built prior to 1925.
- Businesses that provide primarily intellectual services, with no real business or physical property.
- Highly earthquake-sensitive or unique businesses, such as hospitals, gas stations, schools and liquor stores.
COVERAGE TERRITORY: California, with plans to expand further into the Pacific Northwest.
CONTACT: Craig Justice, agency consultant, Arrowhead General Insurance Agency; 805-465-6908.
Jacquelyn Connelly is IA senior editor.