The next big earthquake will be much worse than Northridge, says Motus Insurance Services

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“Insurance and a strong economy are crucial to resilience after a disaster,” said Dan Wallis, CEO and founder of Mots Insurance. “We have just seen the disabling economic effects of the Coronavirus when there was no insurance.”

Los Angeles (PRWEB)
April 22, 2020

Motos Insurance Services, which has introduced a seismic insurance program for California condominium associations and unit owners, released an analysis today showing that multi-family structures are most vulnerable to earthquake damage – which is dangerous given the current epidemic.

California is more vulnerable to a major earthquake than it was in 1994 – the last time a major earthquake struck a populated area. The country’s increasing reliance on multi-family structures to meet its housing needs is the main driver of this weakness. This growth in multi-family structures coupled with lower insurance coverage protecting those structures puts California at risk of major economic damage when it hits the “big”.

The 1994 Northridge earthquake, with a magnitude of 6.7 (in the “moderate” range), destroyed nearly $ 20 billion of apartment buildings, with damage concentrated heavily between multi-family units including apartments, towns, and apartments.

While multi-family structures represented 22% of California’s housing stock in 1994, they accounted for 84% of damaged units and 72% of “red-labeled” units.

Since 1994, California’s multi-family housing units have grown from 2.6 million to nearly 5.4 million today – more than double the most vulnerable segment of the state’s residential housing.

In 1994, insurance played a major role in earthquake recovery. Of the $ 20 billion in damage to apartment buildings, insurance paid $ 12 billion. At that time, 25-35% of apartment associations had a major earthquake insurance policy. Moreover, 35% of the owners of individual condominiums had a single earthquake insurance policy. This allowed insurance to play a major role in recovery and helped prevent a major natural disaster from causing a major economic disaster.

Today, however, less than 10% of apartment associations have a major earthquake insurance and less than 5% of apartment owners buy an individual policy – and the individual policies available for apartment owners cannot provide complete coverage. While the country has seen rapid growth in weak multi-family residential structures, a much smaller portion of these structures has insurance.

“Insurance and a strong economy are crucial to resilience after a disaster,” said Dan Wallis, CEO and founder of Mots Insurance. We have just seen the disabling economic effects of the Coronavirus when there was no insurance. At this point, California has never been more vulnerable to economic devastation. The chronic shortage of housing in California has resulted in a significant increase in apartment development over the past thirty years. We know from the years 89 and 94 that apartments are the most vulnerable to earthquake damage – and unlike in 1994, less than 5% of apartment owners have earthquake insurance.

A major earthquake has long awaited the state of California: Dr. Lucy Jones, also known as “Earthquake Lady,” said California needed to prepare for an earthquake in the range of 7.0 – 7.8, which is twice the size of Northridge. With multiple families divided fairly evenly between apartments and condos, this means a loss of ~ $ 45 billion for condos alone. Since only about 5% of their apartments have insurance, and the insurance available for apartment owners cannot provide complete coverage, this $ 45 billion exposure is not effectively insured.

Motus Insurance has developed a solution that allows apartment owners to purchase the quality coverage they need to protect their homes: the Motus Opt-In Master Earthquake Program.

Before Motus, approximately 2.5 million California apartment owners were not getting adequate earthquake insurance because their apartment societies failed to purchase a major earthquake policy. The main policy can only cover damage to apartment buildings, foundations, garages, underground pipes and other common areas – but less than 10% of California associations have a major policy due to budget considerations.

Motus allows boards to get all the benefits of a traditional master policy without straining an association’s budget. When the California Department of Insurance approved Motus, the barriers between insurance companies and apartment owners were finally removed – allowing apartment owners to access the coverage they needed.

Wallis said: “Today, as the world deals with COVID-19, the impact of the disaster as there is no insurance becomes quite clear: severe economic damage, which leads to what may be a long way to recovery.” “Insurance is a critical component of any disaster preparedness plan, whether for individuals or for the economy as a whole, and proper coverage is something that housing councils and unit owners must think about carefully.”

About Motus solution
Motus Opt-In Earthquake is designed to offer all the benefits of a major conventional earthquake insurance policy to more than 30,000 associations and more than 2.5 million apartment owners not covered by one.

Only a major earthquake policy can allow the apartment owner to fully protect the property in their home. This is because only the main policy can fully cover damage to residential buildings, foundations, garages, underground pipes and other common areas within the community. The traditional unit owner policies (which are only available to about one million out of more than 2.5 million home owners who do not have a major policy) are designed to complement a traditional master policy – not replace the coverage they provide.

Each Motus program is a major policy tailored based on the specific exposures of the association. Once the Board approves the Motus Program for its engagement, each unit owner has the option to purchase his classified share of a major policy – covering indoor units of units, apartment buildings, and common areas.
To learn more about Moots Insurance Services, visit http://www.motusins.com

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