Estimates of insured property damage from the Japan earthquake ranged from $12 billion to $26 billion, despite the fact that only 14 to 17 percent of businesses and homeowners in Japan have earthquake coverage.
Experts expect losses to commercial and industrial property to comprise approximately 35 percent of insured property losses.
Total insured losses, including life insurance losses, could reach $35 billion. Catastrophe modeler Risk Management Solutions Inc. estimated total economic losses from the earthquake and tsunami at $200 billion to $300 billion, or 4 to 5 percent of Japan’s gross domestic product.
Business income claims from the quake could take months to settle, as businesses attempt to prove losses in light of lost records. Business income insurance covers lost profit and operating expenses when a disaster covered by the property policy forces the business to shut down.
Business income insurance can also cover income lost when covered property damage at a “contingent location,” such as a supplier or key customer, causes an income loss.
The global marketplace means many US businesses have contingent business income exposures in Japan.
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