Specialty property insurance company, Palomar Holdings, Inc., has revealed that it faces some exposure to the earthquakes in California last week, but said that losses would be well below the threshold needed to trigger its reinsurance program.
Kern County in southern California was struck by a magnitude 6.4 earthquake on July 4, followed by a stronger magnitude 7.1 earthquake on July 5.
The quakes were the strongest to hit the state in two decades and caused “significant damage” to the town of Ridgecrest and the surrounding area.
For the July 4th quake, Palomar said that it has 14 residential earthquake policies in place within a thirty-mile radius of the epicentre and 22 policies within a fifty-mile radius. It does not have any commercial earthquake policies in place within a fifty-mile radius of the epicentre.
And for the July 5th quake, the company has 14 residential earthquake policies within a thirty-mile radius of the epicenter, and 14 total within a forty-five-mile radius. Again, there were no commercial policies within a forty-five-mile radius of the epicenter.
“The total insured value of Palomar policies within a one hundred-mile radius of the epicenter is considerably less than Palomar’s excess of loss reinsurance program,” Palomar stated.
The company also assessed it the exposures within a one hundred-mile radius of the July 5th epicenter based on the Modified Mercalli Intensity Scale (MMI) used by the United States Geological Survey (USGS) to determine intensity levels at the Earth’s surface.
Palomar reported that the location details for three of its policies were considered MMI VIII (Severe), while ten locations were MMI VII (Very Strong) and one location was MMI VI (Strong).
Additionally, 23 locations were MMI V (Moderate) and all other locations were MMI IV (Light) or less, it said.
“Because of the proximity of the epicenters of the July 4th and July 5th earthquakes and the remote locations, the risks potentially exposed to damage are very similar,” said Palomar CEO Mac Armstrong.
“We have been in contact with several of our insureds in impacted areas like Ridgecrest and are pleased to report that they are safe,” he added. “Palomar remains ready to support its policyholders impacted by the events.”
The California Earthquake Authority (CEA) reported that it had 2,000 policyholders in the affected region, who are likely to have experienced strong shaking. It said any damage to homes should be well within its claim-paying capacity for covered claims.
California Governor Gavin Newson declared a state of emergency for the areas affected by the earthquakes last week.