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After the series of earthquakes that rocked Southern California in early July, the largest in the region in 20 years, the temblors left some retail establishments and other businesses with damaged structures and furnishings.

While damage after quakes is often focused on homes, many businesses are also susceptible to damage. The wine industry suffered more than $80 million in damage during the 2014 Napa earthquake.

Earthquakes are not only a California phenomenon. They can cause building damage in a number of other states: Oregon, Washington, Missouri, Tennessee, Arkansas, Illinois, Kentucky, Mississippi, Alaska, Hawaii – and even South Carolina.

Get the right coverage

Business property policies do not cover earthquake damage, and unfortunately very few business owners think to buy appropriate coverage. When they don’t, they risk financial ruin if they suffer severe damage.

But every business is different and has different needs. An office like a law firm or software developer may not have the same need for coverage as a company that has a lot of expensive equipment or hundreds of thousands of dollars tied up in inventory that can be damaged.

Commercial earthquake insurance policies generally cover:

  • Structural damage due to seismic activity.
  • Damage to property such as inventory, equipment and machinery.
  • Some policies may also cover lost income due to business interruption stemming from an earthquake.

Some carriers may require commercial structures to undergo inspections and make repairs and/or upgrades – such as securing the building to its foundation, bracing walls, chimneys or other masonry, as well as other structural improvements – before issuing a policy.

Also, earthquake insurance policies often have high deductibles – ranging from 2% to as high as 20% of the value of your building, depending on its location, age and condition.

Worker safety

Besides insurance, one of the main things you should be concerned with is the safety of your staff if a quake hits during working hours.

Hazards that workers may encounter during and after an earthquake include being struck by a building’s structural components, furnishings or improperly stored materials; being burned by fires resulting from gas leaks or electrical shorts; and being exposed to released chemicals.

OSHA recommends employers take these steps to help mitigate the risks:

  • Ensure workers have a designated safe place – such as under a sturdy table or desk, or against an interior wall away from windows – to go in the event of an earthquake. Keep the distance an employee has to move as short as possible.
  • Conduct a “Great ShakeOut” drill, part of an earthquake preparedness initiative co-sponsored by the Federal Emergency Management Administration. For more information or to register your workplace, go to https://www.shakeout.org.
  • Regularly practice “drop, cover and hold on” in the designated safe places. Learn more at https://www.shakeout.org/dropcoverholdon.
  • Instruct employees on topics such as first aid and how to use a fire extinguisher.
  • If an earthquake occurs, workers should stay in their safe place until the shaking stops and remain alert for potential aftershocks.

Business continuity

You should identify your company’s critical business functions and define procedures that will facilitate restoration of sales, production and operations to pre-disaster levels. Focus on the following:

Ranking operations – Develop a business impact analysis that ranks functions from highly critical to important, so that you can recover the most critical functions first and then, over time, restore all business processes.

Developing strategies – Once you identify critical functions, develop strategies for how to recover functions within a prescribed time frame. For example, back-up data files should be stored offsite or on the cloud so you can access them quickly after an event.

Documenting the plan – It’s important to document the plan and procedures step-by-step.

Testing the plan – Test your plan once a year. These tests can be a simple exercise in which the staff discusses the steps required to respond to a disaster scenario.

This can help your team identify what won’t work, as well as what will. Business continuity planning is a cycle that requires continual reviews, updates and adjustments based on changes to your business operations.