Commercial Earthquake Insurance
Commercial earthquake insurance covers quake damage that California commercial property and BOP policies exclude. It typically pays to repair the building, replace business personal property, and cover lost income and extra expense while you are shut down, and it is often written as a standalone policy or part of a difference-in-conditions policy.
Just like homeowners policies, standard commercial property and BOP policies in California exclude earthquake damage. For a business that owns or leases its building, holds inventory and equipment, or depends on staying open, an earthquake can threaten both the property and the business itself.
What does commercial earthquake insurance cover?
- Building / structure: repair or rebuild the commercial structure you own.
- Business personal property: inventory, equipment, fixtures, and contents.
- Business interruption and extra expense: lost income and added costs while you are shut down or operating from a temporary location.
- Tenant improvements and betterments: relevant if you lease and have built out your space.
Who needs it? Businesses that own their building, businesses with significant inventory or equipment, landlords and habitational owners, and any business for which an extended post-quake closure would be a serious financial threat.
Commercial earthquake is usually written as a standalone policy or as part of a difference-in-conditions (DIC) policy, which typically bundles earthquake with other excluded perils such as flood. California’s commercial building stock includes many older and unreinforced-masonry structures at higher seismic risk, and some jurisdictions require retrofitting. Because much of this coverage is placed in the specialty and surplus-lines markets, terms, deductibles, and limits vary.
How we help: We review your property, values, and business-income exposure, structure earthquake and DIC options that fit, explain how the deductible and limits affect both your premium and your recovery, and coordinate with your commercial property or BOP so there are no gaps.
Commercial earthquake insurance in California, explained
Does my commercial property policy cover earthquakes?
No. The standard commercial property form, ISO’s Causes of Loss – Special Form, excludes earth movement, which covers earthquake, landslide and volcanic eruption, with an exception only for the fire or explosion that follows. A business owners policy carries the same exclusion. Earthquake coverage is added one of two ways: an endorsement on the property policy, on ISO’s Earthquake and Volcanic Eruption Coverage form with a percentage deductible, or a stand-alone earthquake or difference-in-conditions policy written by a specialty carrier. For a building of any size in Southern California the stand-alone route is the common one, because capacity and terms are set by carriers that price earthquake for a living.
Can I buy it through the California Earthquake Authority?
No. The CEA is authorized by Insurance Code section 10089.6 to sell basic residential earthquake insurance only, and residential property for that purpose means structures of no more than four units, condominiums, mobilehomes and renters. A five-unit apartment building, a warehouse, a shop or an office is outside it. The mandatory offer of earthquake coverage under section 10081 is likewise a residential rule; no carrier is required to offer earthquake coverage on a commercial policy, and many do not.
How does a percentage deductible actually work?
It is a percentage of the insured value, not of the loss, and it is the number to understand before anything else. On a building insured for $5,000,000 with a 10 percent deductible, the first $500,000 of damage is yours. A 5 percent deductible on the same building is $250,000. Under the ISO endorsement the percentage applies separately to each building, to the contents in each building, and to property in the open, so a loss that touches three of those carries three deductibles. Many stand-alone and difference-in-conditions forms apply the percentage to the total insured value at the location instead, which produces a larger number. Which method your form uses is a question to ask at quote, not at claim.
Does the coverage include lost income?
Only if it is written in. Business income coverage follows the causes of loss on the property form, and earthquake is excluded there. An earthquake that closes you for four months produces no business income claim unless the earthquake endorsement or the difference-in-conditions policy includes time element coverage. The same goes for civil authority, when an order keeps you out of an undamaged building, and for utility service interruption after a quake, which needs its own endorsement. On a building that pencils on rent, or a business that cannot trade from anywhere else, the income side is often worth more than the building side.
Which businesses buy commercial earthquake insurance?
The question arrives from every industry, and the answer is decided by four things rather than by trade. Do you own the building, or hold a lease that makes you responsible for it? How much equipment, inventory and tenant improvement is inside it? How long could the business survive without the location? And does a lender require it? A restoration contractor, a plumber or a janitorial company with equipment in a leased yard has a contents-and-income question. A manufacturer, a distribution company or a retail store with stock on the floor has a contents question first and a building question if it owns. A law firm, a marketing agency, a mortgage broker or a staffing company in leased offices has mostly an income and improvements question. A veterinary clinic or a home health agency has all of them plus the people who depend on it opening. The coverage is the same product in each case; what changes is which limits matter.
What does a lender require?
There is no statute, so it comes from the loan documents. The agency lenders set the pattern for multifamily. Fannie Mae’s multifamily guide requires a seismic risk assessment on properties in higher seismic zones and, where the expected loss exceeds a threshold, mitigation by retrofit or by earthquake insurance carried at full insurable value with a capped deductible. Freddie Mac’s guide follows the same logic with a probable-maximum-loss threshold above which coverage is required. Private lenders on commercial property write their own versions. If a refinance is coming, read the insurance covenant before the appraisal.
Do retrofits and building age change the price?
Yes. Underwriters rate on construction type, year built, soft-story or tilt-up configuration, and retrofit status. In the City of Los Angeles, the mandatory retrofit ordinance adopted in 2015 covers pre-1978 wood-frame soft-story buildings and non-ductile concrete buildings permitted before 1977. California’s unreinforced-masonry law has required cities in the highest seismic zone to inventory and address those buildings since 1990. A completed retrofit with permits closed is the document to have ready when the quote is requested; an open Order to Comply is a question every underwriter will ask.
How do you get a commercial earthquake quote from us?
Start a business insurance quote and send the property’s address, year built, construction type, square footage, whether you own or lease, the values for building, contents and annual income, and any lender requirement. Commercial earthquake is placed in a specialty market almost every time. Some risks quote quickly; larger or older buildings go to underwriting and take longer. Either way you know before you decide. For the residential side, and for the myths that follow this coverage around, see California earthquake insurance myths and earthquake insurance in California: CEA versus the private market.
Statutory and form references current as of September 2026; lender guide thresholds change and should be read from the current guide before relying on them.
Earthquake is excluded from the commercial property form and has to be bought separately, which is why this page exists. The wider program is on our business insurance page.
