Preparing for disasters: informed, educated insurance coverage decisions essential to survival.

• Author: Bohi, Heidi
• Position: INSURANCE

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When the Great Alaska Earthquake hit without warning March 27, 1964, though it only lasted about five minutes, it caused $1 billion in damage, destroying 215 homes and 157 commercial buildings, along with 60 percent of Anchorage's water lines, half the city's streets, curbs, gutters and sidewalks, and many of the sewer lines. A full block of 4th Avenue fell 30 feet toward the center of the earth. In Seward, oil tanks ignited, the town lost 95 percent of its railroad, highways were under water and a mile long area of the city collapsed into the sea. Post-quake tsunamis severely affected Valdez, Whittier, Seward, Kodiak, and other Alaska communities, wiping out entire villages and taking more than 100 lives.

PREPARE NOW

Today, the devastation and economic consequences resulting from an earthquake or other disaster would be more disruptive and increase every year from escalating building, equipment, technology and infrastructure investments. Alaska learned valuable lessons from the earthquake and other headline-making disasters. When it comes to buying insurance, industry experts say, there is still room for improvement. The stakeholders--homeowners, business leaders, builders, financial institutions, insurers and government agencies--need to work together to increase the top-of-mind awareness about disaster preparedness insurance.

"When the time for action comes, the time for preparation has passed," so the saying goes. Lynne Seville, vice president of Parker, Smith, Feek, an insurance and risk management brokerage firm, says in many cases businesses don't always purchase insurance coverage that may help mitigate financial loss incurred during disasters. Instead arguing that the remote risk of a disaster--whether it's an earthquake or devastating fire--isn't worth the cost of limited coverage. Although premiums are affordable, many businesses don't purchase insurance coverage that adequately respond to loss of income and continued expenses when it should be a top priority.

DENIAL DETRIMENTAL

Those who have been affected by disaster in the past are more likely to take precautionary measures, though even they remain in denial. Residents who live along a fault line were asked of the disadvantages of their location: 44 percent could not think of any problems, nobody mentioned earthquakes and those who did realize the dangers of potential disasters said all they do for precaution is pray.

When it comes to "shock...