Insurance carriers continue to closely monitor California’s earthquake liabilities, much like they track risks from wildfires, floods, and hurricanes. With seismologists warning that California is overdue for a major earthquake, property owners and insurance providers alike are growing increasingly concerned. As these risks escalate, so do the costs associated with earthquake insurance.

Currently, there are about 15 competitive insurance carriers in California. However, for older buildings—especially those with five or more units under one roof—the options become much more limited.

“The insurance market is tightening,” said Matt Fuller, president of Fuller Insurance Company, in a recent interview. “Carriers are more selective than ever. They’re prioritizing properties with safety upgrades, including seismic retrofits. If these improvements aren’t made, insurers may raise premiums, restrict coverage, or refuse to insure the building altogether.”

Insurance, Retrofit, or Both?

Many apartment owners grapple with the decision of whether to purchase earthquake insurance, invest in a seismic retrofit, or both. Unfortunately, some opt for a fourth choice—doing nothing. This “bare” approach leaves their property, assets, income, and tenants at extreme risk.

The California Department of Insurance offers these key questions for those considering earthquake insurance:

  • Is your building located in an earthquake-prone area?
  • Do you own a high-risk structure?
  • Can you afford to pay full recovery costs if you do not have earthquake insurance?
  • What is your liability risk for tenant injury or loss of life?

Decades of scientific research have quantified building performance in extreme seismic events. These risk models are now widely used by insurers to price hazard coverage. While earthquake insurance can help cover some of your losses, it does nothing to physically protect your property, income, or tenants. If a tenant is injured or killed, you could face millions of dollars in liability for maintaining a hazardous structure.

Are Retrofits More Cost-Effective?

Beyond the high premiums associated with earthquake insurance, most policies carry a deductible of about 20% of the building’s replacement cost.

By comparison, a seismic retrofit is much more affordable—typically costing only 0.3% of the replacement cost of the building.

This means a retrofit is significantly cheaper than the out-of-pocket costs an apartment owner would pay toward an insurance deductible in the event of a major quake.

Additionally, retrofits enhance property value—similar to upgrading a roof or plumbing system. Tenants also prefer buildings that have been retrofitted for safety, providing landlords with a competitive advantage in the rental market.

Take Action Now

If you own an apartment building that may be vulnerable to earthquake damage, take proactive steps to protect your investment and tenants. Optimum Seismic offers complimentary structural evaluations to help you understand your risks and determine the best course of action.

For more information, visit optimumseismic.com or call 833-978-7664 today.