Northern California quake costs could reach $4 billion

By Michael B. Marois, Zachary Tracer and Dan Hart / Bloomberg News

Published Aug 26, 2014 at 12:02AM

Cleanup shouldn’t deter tourists, businesses say

NAPA, Calif. — With the dust still settling from Sunday’s magnitude-6.0 temblor centered near the city of Napa, government and tourism officials assessing its economic and structural impact encouraged visitors to keep flocking to the charming towns, tasting rooms, restaurants and spas that drive the Napa Valley economy.

While cleanup will take time and broken water mains remained a problem, they said, the worst damage and disruption was confined to the city’s downtown, where a post office, library and a 141-room hotel were among 150 homes and buildings deemed unsafe to occupy.

The strongest earthquake to hit the San Francisco Bay Area in a quarter-century also caused several injuries, triggered fires that destroyed or damaged six mobile homes, and ruptured gas lines.

“Clearly, we are concerned that people are going to see that it was a catastrophe, and it certainly wasn’t good, but it wasn’t a catastrophe by any means,” Clay Gregory, president of tourism organization Visit Napa Valley, said as workers at a shuttered downtown visitor’s center updated lists of open wineries and surveyed hotels about cancellations. “The real story is that it has impacted a very small part of the valley.”

In Napa Valley, two hotels and 12 wineries were still closed Monday, as well as many of the businesses downtown, he said.

The Napa Valley Wine Train, which offers tourists a three-hour journey through 18 miles of wine country, canceled its service Monday but planned to resume trips today. Other tour operators said they were taking it one day at a time, readjusting tours as each winery decides when to reopen.

“We’ve definitely had to make some last-minute adjustments for this week as people are assessing damage,” said Sherry Laseke, whose family owns Saint Helena Wine Tours, a boutique luxury tour operator. “Everybody is dealing with broken glass.”

The 19th-century stone-and-masonry Victorian buildings that form the core of Napa’s downtown, and are part of the town’s attraction to tourists, were hit the hardest by Sunday’s earthquake.

— The Associated Press

SACRAMENTO, Calif. — The earthquake that struck Northern California on Sunday will lead to economic losses of as much as $4 billion, fueled by damaged wineries and shuttered businesses that rely on tourists.

Insurers will probably cover about $2.1 billion, according to an estimate from Kinetic Analysis Corp., which projected total losses of about twice that sum. Costs borne by the industry may be limited because many homeowners don’t have earthquake coverage, according to the Insurance Information Institute.

“The main source of claims could well be commercial claims, those coming from wineries and vineyards and other commercial interests,” Robert Hartwig, the institute’s president, said in an interview Monday. “It will take awhile for the business owners to sort this out.”

The temblor, the strongest in Northern California in 25 years, hit the Napa region north of San Francisco at about 3:20 a.m. Sunday, crumpling historic buildings, cracking roads and injuring more than 200 people. The quake left many in the region without power and water, and California Gov. Jerry Brown declared the zone a disaster area.

In Napa, debris and broken glass littered the sidewalks in front of restaurants, wine stores and antique shops. PG&E Corp. crews checked about 100 reports of gas leaks and odor and determined that there are no more leaks, according to an update posted to the city’s website late Sunday.

Catastrophe-modeler Eqecat estimated there would be $1 billion of insured losses, with as much as half that figure coming from residential claims. The cost for the industry could climb because of coverage that protects commercial policyholders from lost revenue, Eqecat said. Such losses have fueled higher-than-expected claims from other recent catastrophes including superstorm Sandy in 2012.

The Napa region “is dotted with upscale and luxury boutique hotels, spas and inns,” Eqecat said. “Business interruption losses are a major concern.”

The upcoming three-day weekend, which includes the Labor Day holiday on Monday, is a major travel period in the United States. About 34.7 million Americans will take a trip at least 50 miles from home next weekend, the highest figure for the holiday since 2008, according to a projection from AAA.

“I don’t know how interrupted the winery tourism season is going to be,” Meyer Shields, an analyst at Keefe, Bruyette & Woods, said by phone. For an insurer dealing with a commercial customer, “the question is, ‘How interrupted are your operations?’ — and that’s completely unknowable at this point.”

The Napa-Sonoma area is home to one of California’s best-known wine-growing regions. Napa County has 789 licensed wineries, which had sales of $5.5 billion in 2011, according to the Napa Valley Vintners Association, a trade group.

“It was a significant earthquake” City Manager Mike Parness said in an interview. “Given the magnitude and the reports of damage, this is going to take some time to get back from.”