Covering the damage for a once-in-a-century disaster

Covering the damage for a once-in-a-century disaster

City officials havent yet put a final tally on the damage caused by Augusts earthquake, but the cost of repair work could reach as much as $500,000. 

Good thing City Hall is covered for what amounts to a once-in-a-century natural disaster. 

The 5.8-magnitude quake caused little damage and few injuries citywide, but it did disturb chimneys at historic Gadsbys Tavern. It caused the partial collapse of a wall at City Hall, too, said Jeremy McPike, general services department director. 

Coupled with repairs to other city-owned properties that suffered minor cracks, like the Friendship Firehouse, the damages are in the ballpark of several hundred thousand dollars, well above the $100,000 deductable for earthquakes under the citys commercial property policy with Lexington Insurance, said to Rick Willsey, Alexandrias risk assessment manager. 

While Willsey occasionally dealt with earthquake claims prior to working for the city, its not exactly paperwork local officials are experienced in filing, he said. Basically, the policy covers damage of more than $100,000 from the occurrence and any aftershocks within 72 hours, he said.

Since weve never made an earthquake claim before, exactly how that washes out well find out when we meet with them, Willsey said. I have very little earthquake insurance experience as an easterner, but well learn quickly.

The historic nature of the buildings damaged has exacerbated the cost. The chimneys at Gadsbys Tavern required stabilization filling them with concrete to keep loose mortar secured before contractors can begin the laborious job of repairing them. Workers must catalogue and remove each brick before eventually rebuilding the structures exactly as they were prior to the quake. 

We anticipate repairs will take probably more than a month to accomplish, McPike said. City Hall was rebuilt in 1871 and for Gadsbys, of course, the museum wing was built in 1785 and restaurant in 1792. These are structures that are of significant value and we want to make sure we reconstruct them appropriately.

City buildings are covered for earthquakes though not nuclear attacks or reactor meltdowns. But most homeowners likely were without insurance for the relatively rare natural disaster.

Bill Howard, of Clarke and Sampson, an Alexandria-based insurance agency, was deluged with calls from clients either inquiring about their coverage or interested in buying earthquake insurance after the August trembler. Home and business owners must opt for earthquake coverage. Like flood insurance, it doesnt come standard, he said. 

Generally, its going to be excluded on every policy, Howard said. Id venture to say that 99.9 percent of the people in this area do not carry it.

Though hes talked to clients now interested in opting for earthquake coverage, Howard believes most eventually will pass on the added insurance. For a $500,000 home, the additional coverage would likely add $250 to the premium, he said. 

And the deductable is usually a percentage of the property value, not of the overall cost of damages. For example, if the individual had a 2 percent deductable, which is the most common, and an Old Town home valued at $1 million, the cost of repairs would need to exceed $20,000 before insurance would kick in, Howard said. 

We had a number of clients that had losses, their chimneys came off the building and some did go through the roof, he said. Then they realize that even if they did have some of these Old Town houses insured, they would have had a $20,000 deductable anyway and the loss was often times less than the deductable.

Fortunately, resultant damage, like a fire caused from a gas line damaged in the quake or burst pipes, is covered under most policies, according to Howard.

Ultimately, it comes down to budgeting. No insurance policy covers every possible event and the list of usual policy exclusions is often too long to list in a single sitting, he said.

And the more insurance coverage an individual seeks, the higher the premium.

Even as insurance agents, when we buy our insurance there are conscious decisions as what not to insure, Howard said. If you literally bought them all your insurance budget would be way out of whack.