Jonathan Edewards

Does your business have an Earthquake Plan?

The Big One hits.   Power is out.   Roads are blocked.   Supplies are limited. 

How fast can your business get back on its feet? 

Can you be better prepared than your competitors?

Could you gain new customers by being ready when other businesses are not?

 

Los Angeles and Orange County California Fault Map

Fault Lines in Southern California

Here are some strategies for preparing for the earthquake, before it hits.

  • Establish a Business Continuity Management Plan (BCM) that takes crisis management, and business recovery, into consideration. If a BCM is already in place, review and update it as needed for earthquake readiness.
  • Consider where your employees live and discuss plans for continuing work.  How will they get to work if routes are blocked?  How will you communicate with them if cell phones & telephones & internet connections are down?  Can you establish and agree upon predetermined procedures that can work around such complications?
  • Brace all tall shelves and cabinets, tall machinery and equipment, or any top-heavy objects that could topple.
  • Brace and support overhead-mounted fixtures, suspended ceilings, piping, heaters, and other overhead-mounted devices.
  • Plan for continuous plant security.  How will you protect your property from looters?
  • Provide auxiliary equipment and energy supplies for critical services such as communications and lighting.
  • Provide adequate support for mainframe computers.  Back up your data at an off-site location.
  • Provide flexible fuel supply connectors to avoid ruptured gas lines, etc.
  • Bolt down and secure fuel-fired appliances, along with any pressurized gas cylinders.

    Insufficiently secured gas cylinders

    Will these gas cylinders break loose of their chains and roll?

  • Provide isolation valves for piping systems.
  • Provide alternate energy sources for vital equipment and services.
  • Plan for customer and client awareness and communications.
  • Provide an alert and warning system for all personnel on the premises.
  • Designate a BCM Coordinator and a BCM Team. Assign responsibility to specific employees for advance arrangements to initiate the plan.
  • Conduct a business impact analysis and risk assessment of the facility and its operations. Upgrade deficient areas.
  • Upgrade the facility to current earthquake codes.
  • Inspect tanks, stacks, signs, and chimneys for deterioration and bracing. Repair and strengthen as necessary.
  • Identify and designate safe shelter areas in the structures.
  • Identify and designate at least two evacuation routes for all areas.

 Next up: What to do AFTER the earthquake hits

Catastrophe in Japan raises Earthquake, Flood Concerns in California

As Californians watch the news coverage and YouTube videos of the devastating earthquake and tsunami that occurred in Japan, many have started to wonder, “Are we vulnerable, too?”

The geology off the coast of Japan is very different from the California coast, so an exact repeat isn’t likely.  However, California is certainly an earthquake zone, and much of Southern California and Central California is vulnerable to flooding.

The fact is: almost all property insurance excludes coverage for earthquake and flood.  That means that your homeowners or businessowners insurance policy will not reimburse you if an earthquake or flood (including tsunami) causes damage to your home or business.

And that exclusion extends to resultant damage, too.  For example, if an earthquake causes your property’s gas lines to rupture, or causes an overload to your electrical system, which sparks a fire, the resulting damage–burned buildings and burned contents–will not be covered by insurance.  The cause of loss in that example is earthquake.  The earthquake caused the fire, and the fire caused the damage to property. Even though fire–by itself–is normally covered, the fire was caused by the earthquake, and therefore all the damage falls under the earthquake exclusion.

Ditto for resultant damage from a flood.

Earthquake insurance can be purchased as a separate insurance policy in addition to your homeowners or businessowners policy.  Although earthquake insurance is very expensive (expect to pay about as much as your standard property insurance policy, or more), and typically will carry a high deductible, an earthquake insurance policy will offer you the reassurance that you won’t lose everything when the “Big One” hits.

Flood insurance, on the other hand, is very inexpensive, and every property owner should purchase a policy, even if the risk looks minimal.  The fact is that every property is located in some kind of a flood zone — it is just a question of whether it is a in a moderate-to-low zone or high risk zone.  About 25% of all flood insurance claims are from moderate-to-low risk areas.

Many property owners believe that in the event of an earthquake or flood, the government will step in and provide disaster assistance.  This is true, but only if the President declares a disaster, and even so, Federal disaster assistance is usually a loan that must be paid back with interest. For a $50,000 loan at 4% interest, the monthly payment would be around $240 a month ($2,880 per year) for 30 years, in addition to the mortgage loan that is still owed on the damaged property.

Insurance can be purchased quite easily, and it’s the best way to protect the time, energy, and money that you’ve invested in your property.