Australians are a pretty resilient people, and are no strangers to natural catastrophes, considering we get hailstorms, floods, bushfires and, in northern parts of the country, tropical cyclones. But the news that Victoria was hit by a magnitude 5.9 earthquake causing damage in Melbourne last month may have taken many by surprise.
To date, around 10,000 insurance claims have been lodged in relation to the event, with insured damage of $147 million, according to the Insurance Council of Australia. Geoscience Australia says the earthquake was the largest to hit Victoria since 1900, but it’s not the first earthquake that has affected a major population centre in Australia.
Earthquake history in Australia
The Newcastle earthquake in 1989, which killed 13 people and damaged around 50,000 buildings, caused $862 million in insured damage at the time, which would be equivalent to $4.2 billion on a normalised basis.
Compared to more well-known earthquake zones, such as New Zealand, Japan and the western coast of the US, Australia is not known for its earthquake risk.
The entire country sits on a single techtonic plate, the Australian plate, rather than over a major fault line, however there are many smaller fault lines within the plate and Australia experiences an earthquake similar in size to the recent one in Victoria every one to two years, according to Geoscience Australia.
But, by and large, they have occurred in sparsely populated rural areas, where damage has been minimal. For example, the largest earthquake in Australia, at magnitude 6.6, occurred in outback Northern Territory town, Tennant Creek, in 1988.
Areas considered at highest risk
Of our major cities, insurers have long held concerns about the earthquake risk in Adelaide, which has several fault lines running through it. A magnitude 5.4 earthquake that struck Adelaide in 1954 caused damage that, in today’s money, is estimated at over $1 billion.
However, an update to the National Seismic Hazard Assessment for Australia in 2018 also identified Canberra as a high-risk city because of its proximity to one of Australia’s most active faults, at Lake George.
Building damage and insurance cover
Damage cause by earthquakes is generally covered by home and commercial property insurance, and the impact on a business following an earthquake would be covered by a business interruption policy if the premises is damaged.
While the Newcastle earthquake prompted changes to Australia’s building code, from a damage point of view, older buildings that weren’t built to the current code are more susceptible to earthquake damage.
Double brick buildings are more likely to be impacted and in particular, non-structural, unreinforced decorative features such as parapets, gables and chimneys can easily fall during an earthquake if they’re not secured to the building’s structural core.
Here to help
For any questions you may have about your exposure to earthquake risks – or any other insurance needs – Gow-Gates Insurance Brokers has a highly experienced team focused on finding the very best solutions for our clients. Contact us today for risk management advice and a detailed discussion of your insurance requirements.
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