You are here:HomeIssuesNatural Disaster2014Napa Valley Earthquake Could Cost As Much As $4 Billion

Napa Valley Earthquake Could Cost As Much As $4 Billion

The August 24 earthquake that hit the Napa Valley region of California will lead to economic losses of as much as $4 billion, fueled by damaged wineries and shuttered businesses that rely on tourists...
August 27, 2014

The August 24 earthquake that hit the Napa Valley region of California will lead to economic losses of as much as $4 billion, fueled by damaged wineries and shuttered businesses that rely on tourists. Insurers will probably cover about $2.1 billion, according to an estimate from Kinetic Analysis Corp., which projected total losses of about twice that sum. Costs borne by the industry may be limited because many homeowners don't have earthquake coverage, according to the Insurance Information Institute (I.I.I.).

The quake, with a magnitude of 6.0, was the strongest to hit the San Francisco Bay area in the last 25 years. The temblor destroyed a wide variety of homes in many neighborhoods, ruptured dozens of water and gas lines and injured more than 100 people. Most of the injuries were relatively minor.

Even though the damage was extensive, scientists said that residents of the region were lucky the quake did not cause greater devastation; they noted the 1906 San Francisco earthquake was 500 times stronger than the recent temblor in Napa Valley.

I.I.I. reports that updated maps from the U.S. Geological Survey show that 42 states are at risk for earthquakes, with 16 states at high risk, however a recent study by the I.I.I. reveals that only 7 percent of homeowners nationwide report having earthquake coverage, down from 10 percent last year. Standard homeowners, renters and business insurance policies do not cover damage from earthquakes, says Jeanne M. Salvatore, SVP and chief communications officer at the I.I.I. Coverage is only available in the form of an endorsement or as a separate policy. The time to find out what is in your insurance policy is before you have a loss.

Filed under: