The magnitude 6.1 earthquake that struck Napa Valley and the San Francisco Bay area of California could end up causing between $500 million and $1 billion of insured losses or more, according an early estimate from catastrophe modeling firm EQECAT.
EQECAT issued a bulletin on the Aug. 24 early morning event that injured dozens of people, destroyed historic buildings and seriously damaged many Napa Valley wineries. The earthquake is also the biggest to strike the region since 1989, when the Loma Prieta Earthquake reached magnitude 6.9, EQECAT noted.
EQECAT, owned by CoreLogic since December 2013, said the insured loss estimate included in its Sunday night bulletin is not yet set in stone, and could go higher, because officials are still estimating the extent of the damage.
“It should be noted that there is a fair amount of uncertainty associated with this, given the unknown extent of [business interruption] and contents losses, which are still being fully understood,” EQECAT said.
Residential losses take up between one quarter and one half of the total losses. EQECAT said that if total insured losses exceed $1 billion, “it will be from uncertainty in commercial losses” stemming from damage to the region’s famed wine industry that could exceed early expectations because of the earthquake’s unfortunate timing.
“It is anticipated that losses to the wine industry could increase this estimate,” EQECAT noted. “At this point in time the Napa Valley wine harvest had already begun. Had this event occurred pre-harvest these losses would have been less.”
EQECAT said that the city of Napa is in a state of local emergency, following initial reports of structural damage to various historical buildings. Downtown Napa has also been cordoned off to give officials time to fully assess damage. Officials are worried about business interruption to the region’s wineries and restaurants, which rely heavily on tourists.
EQECAT said it will follow the situation and “provide updates as necessary.” Meanwhile the catastrophe-modeling firm added that aftershocks of varying degrees of intensity are likely within one week of the initial earthquake.