It's Enough to Make You Quake in Your Boots
Suppose you own a commercial property. It's an old building – one that's susceptible to damage by earthquakes. But under applicable law, you have until 2018 to renovate the building for seismic safety.
Quiz time: If there's an earthquake that damages your building, are you financially responsible for any deaths or injuries your tenants suffer? If the building is in California, the answer is "yes."
Last month, the Mastagni family found this out the hard way in a San Luis Obispo, California courtroom. A civil jury awarded US$2 million to the families of two women who died when one of the Mastagni’s buildings collapsed during the 2003 San Simeon Earthquake.
Think you can count on liability insurance to pay this type of claim? Think again. General liability insurance policies don't provide earthquake coverage. And earthquake coverage generally covers only physical damage to a structure – not negligence.
What this means is that if you own commercial property in California, the 2018 deadline for retrofitting your buildings so they meet the current earthquake resistance standard is meaningless. You must retrofit it before the next earthquake hits, whenever that may be. If you don't, and an occupant of the building is injured or killed, then you're liable. And it's highly unlikely you can purchase insurance coverage to mitigate the risk.
You say it's too expensive to retrofit the building? That was the Mastagni's response when they received a proposal to shore up their 111-year-old masonry building leveled in the 2003 quake.
Well, tough luck. It doesn't matter what the cost is. If you don't want to pay for the retrofit, sell the building. Or rent a wrecking crane and level it. (Naturally, if the building is "historic," this is probably illegal.)
Let's hope that the Mastagni’s had a well-crafted asset protection plan in place years before their building collapsed. They're going to need it.
Suppose you own a commercial property. It's an old building – one that's susceptible to damage by earthquakes. But under applicable law, you have until 2018 to renovate the building for seismic safety.
Quiz time: If there's an earthquake that damages your building, are you financially responsible for any deaths or injuries your tenants suffer? If the building is in California, the answer is "yes."
Last month, the Mastagni family found this out the hard way in a San Luis Obispo, California courtroom. A civil jury awarded US$2 million to the families of two women who died when one of the Mastagni’s buildings collapsed during the 2003 San Simeon Earthquake.
Think you can count on liability insurance to pay this type of claim? Think again. General liability insurance policies don't provide earthquake coverage. And earthquake coverage generally covers only physical damage to a structure – not negligence.
What this means is that if you own commercial property in California, the 2018 deadline for retrofitting your buildings so they meet the current earthquake resistance standard is meaningless. You must retrofit it before the next earthquake hits, whenever that may be. If you don't, and an occupant of the building is injured or killed, then you're liable. And it's highly unlikely you can purchase insurance coverage to mitigate the risk.
You say it's too expensive to retrofit the building? That was the Mastagni's response when they received a proposal to shore up their 111-year-old masonry building leveled in the 2003 quake.
Well, tough luck. It doesn't matter what the cost is. If you don't want to pay for the retrofit, sell the building. Or rent a wrecking crane and level it. (Naturally, if the building is "historic," this is probably illegal.)
Let's hope that the Mastagni’s had a well-crafted asset protection plan in place years before their building collapsed. They're going to need it.
No comments:
Post a Comment