Are Property Owners And Insurers Ready For The Next Big Earthquake?

In 1994, the magnitude 6.7 Northridge earthquake hit California, damaging 40,000 buildings and causing insured losses of $12.5 billion. If an earthquake like Northridge were to occur today, it could cost nearly $19 billion in insured losses.

By 2044, there is a 93% possibility that an earthquake of that magnitude or greater will strike California. According to our models, the total replacement value of all affected properties is estimated to be about $5 trillion.

But earthquakes aren’t just limited to the West Coast.5,6 Over 20,000 earthquakes happen every year.7 Every day the Earth’s tectonic plates are in constant motion beneath our feet, and there are even areas like the New Madrid Seismic Zone in the Midwest that are at risk despite not being located anywhere near a plate boundary.

So the big question facing many insurers and policyholders is: Are we equipped for these rare-but-devastating disasters?