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The Insurance of Earthquakes

On December 6th 2016 a 6.1 Magnitude earthquake rattled Trinidad and Tobago with the epicentre 25km southwest of Scarborough.

Other than some social media chatter a day or two after the event and a few news articles flying around about minor damage around the island, what does this really represent and mean for us in T&T?

What many of us don’t know is earthquake severity can be expressed in terms of intensity and magnitude; intensity being effects of the ground and buildings shaking and magnitude relating to amount of energy released at epicentre of the earthquake.

As a recent point of comparison, the 2010 Haiti earthquake was 7.0 magnitude, killing more than 250,000 people and damaging almost 90% of infrastructure in some towns near its epicentre.

In Chile that same year, an 8.8 magnitude rocked its vast coastline causing widespread damage on land and initiated a 50 foot tsunami, causing over US$30 billion in damages, in which the insurance market paid out US$8 billion.

Get Smart (and Insured)

Insurance market penetration rates indicate that a significant portion of the T&T population don’t have home or business Property insurance, and therefore (unless flushed with serious cash at the bank) many don’t have the protection or coverage to rebuild after a major earthquake. This is just not wise thinking, and these past events should always provide us a reminder as to the significance of our insurance sector.

Your Property/Contents insurance policy premium won’t even set you back that much. Insurers assess and rate on the total declared values of your property and contents, the quality of building or home construction, location, and protections in place. Of course, there is a deductible applied (which is essentially the sharing of risk between the insurance company and policyholder) and for Earthquakes (and other Natural Catastrophes) the market standard deductible is 2 percent of the Sum Insured.

So, as an example, say your house is insured for $500,000 in value, 2 percent of $500,000 i.e. $10,000 would be deducted from the amount you are reimbursed on a claim. In the event of estimated damages of $150,000 from an Earthquake loss, you would now collect a $140,000 cheque.

Earthquake Tips to Follow

This recent “Act of God” should be taken very seriously, as will serve as a reminder of the importance of education and disaster preparedness. Below I have highlighted the important steps to follow before, during and after an earthquake occurs. You can visit for more detail on this.

Before an Earthquake

  1. Know your Risk. See if you live or work near an active fault line and whether the ground around where you live is more susceptible to an earthquake.

  2. Retrofit and Reinforce. Take steps to reinforce your house/office by bolting the building to the foundation and use reinforced support beams if needed.

  3. Secure your surroundings. Shaky furniture such as bookshelves, cabinets should be secured to the walls to minimize risk of falling over during a quake. Ensure always cabinet doors are closed to help contents from falling out.

  4. Disaster Plan. Create a disaster plan to protect your family, and if you are a business owners create a plan to protect your employees. Simply by knowing where to take cover in a house or office and how to communicate with each other after an event or where to meet after shaking stops can significantly reduce anxiety.

  5. Forward Plan. It is unpredictable how significant an earthquake can affect you. Putting together an ample emergency kit with perishable food, water, first aid supplies, blankets, flashlights, batteries etc. is necessary and should be easily accessible in the office and/or house should you ever need it.

  6. Get Insured. As we live in an earthquake prone island, it is important to investigate obtaining insurance to protect you in the event of a physical loss. This will give you the peace of mind to recover the damages for what can be a life changing event.

During an Earthquake

  1. Avoid. Stay away from windows and furniture that can fall over, or where debris can hit you.

  2. Take cover. Get under sturdy tables or desks to avoid getting hit by anything. If you can’t find safe cover during the rumble protect your head and neck with your arms.

  3. Don’t run outside. Do not try and go outside until after the shaking stops. You are safer inside under a sturdy table than attempting to leave a building during an earthquake.

  4. Driving. If you are in the car, pull over to the side of the road, set the parking brake. Avoid stopping under overpasses, power lines, signs etc.

After an Earthquake

  1. Aftershocks. Earthquakes are usually followed by aftershocks that follow the main event and can last for up to weeks after the event. Be prepared for these.

  2. Check Leaking gas. Check your gas lines for leaks. If you smell gas leaking, turn off the gas if possible and call the gas company to check. Do not use an open flame in your house until you are sure it is safe.

  3. Check Damaged wiring. If you see damaged wiring shut off the power in your office or house.

  4. Shoes on. There may be broken glass or spilled chemicals on the floor. Don’t walk without shoes on until the floor is safe and clean.

  5. Claiming on Insurance. If your insurance policy covers earthquake damage, make sure you take photos or video of the damage to use in the claim process. Contact your insurance broker right away to see what additional information is needed in completing the claims process.

Any questions or advice needed, or if you want us to re-evaluate your business or home insurance policy - call 235 2355 or 667 4788 and speak to your Bell Broker today.

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