Everything worthwhile has a price. Living and working in Southern California is no exception to this rule and this land of beauty has risks associated with it. Earthquakes, a vicious and deadly natural occurrence, are a fact of life in our paradise.

While large quakes are rare a brief look at local history reminds us of the sudden and lasting devastation earthquakes can cause.

• In 1812 the Santa Barbara earthquake produced a tsunami that hit the coast not far from Gaviota Pass.
• In 1925 the Santa Barbara earthquake almost completely destroyed the downtown business district and caused 13 deaths.
• In 1971 the San Fernando (Sylmar) earthquake caused over $500 million in property damage and 65 deaths.
• In 1994 the Northridge earthquake rocked the San Fernando Valley causing widespread damage to freeways, parking structures, office buildings, apartment buildings and homes.

This year marked the 100 year anniversary of San Francisco’s 1906 earthquake. On April 18th 1906, at 5:12 a.m., the earth shook beneath SF, flattened the city and caused an untold number of deaths. The quake had the positive effect of spurring the modern science of Seismology.

Yet, despite 100 years of progress, seismologists are still unable to predict earthquakes accurately. The more they learn, the more they realize they do not know enough to predict the future; they can only prepare us against the worst.

Business owners and homeowners carry the responsibility of being risk managers. Earthquakes in the 90’s caught many property owners off guard, allowing for catastrophic losses.

As risk managers business owners and homeowners must first identify the risks they face.

The first question to consider is this; is your property susceptible to an earthquake? And, if it is, what is the potential financial impact? Given the area we live and work in we can safely say that we are all susceptible to losses caused by an earthquake. Using any piece of property as an example, we can begin to help calculate the financial impact using the questions below.

• What is the cost to rebuild the structure(s) and hardscapes?
• What is the cost to replace the contents?
• How long will it take to rebuild the structure(s) and what will it cost to find a replacement property in the meantime?

Secondly, risk managers must choose to avoid, assume, or transfer the identified risks.

The choice to reside and work in Santa Barbara, Ventura, and Los Angeles counties eliminates the option of risk avoidance because earthquakes are inevitable.

Assuming the risk means we fully accept the financial consequences of a loss caused by an earthquake. We can choose to set liquid assets (cash) aside to fund the risk, or we can choose to accept the risk unfunded. Accepting an unfunded risk that is beyond our financial capabilities is the equivalent of gambling with an insufficient bankroll. As a property owner you must protect yourself against risk of this magnitude. Earthquake coverage places your property under a protective umbrella, allowing you to breathe a little easier.

Transferring the risk involves insurance. With a properly written insurance policy from a financially stable insurance company, a substantial part of the risk can be transferred. For those who can not afford the financial consequences of an earthquake, this is the best method of dealing with the risk.

Our experience is that most business and home owners decide not to purchase earthquake coverage. Comments we often hear include “the premium is too expensive” and “the deductible is too high.”

Premiums vary considerably. Locations, age of the building, and the type of construction all have significant impacts on the cost and availability of insurance. For $550 a month and a 10% deductible a 1970 frame construction building in Santa Barbara can receive over $2,000,000 in earthquake coverage. Covering everything from rebuilding costs to rental income loss earthquake insurance provides valuable protection and peace of mind.

To summarize, earthquakes are a risk for all of us. Deciding what to do with this risk is a tough decision. At the very least, you should consider earthquake insurance. Earthquakes are capable of significant damage, often beyond the scope of individuals. Transferring the financial consequences to an insurance company may seem costly, but when the time comes it can make all the difference.

If you want to learn more about historic earthquakes in Southern California, an informative web site is Southern California Earthquake Data Center.

To learn more about the science of predicting earthquakes pick up the April 2006 National Geographic or go to The Next Big One @ National Geograhic Magazine for a quick synopsis.

Q & A with Chris Hill by Jackie Gerber

JG: Share with me a little bit of your personal background.

CH: I am a Santa Barbara native and I was a Santa Barbara Don before heading north to Santa Clara University. My childhood activities were centered closely around my family and our passion for riding horses. Our vacations included travel in the United States and Canada for horse shows and relaxing in Baja, Mexico.

My wife Barbara and I have been married for 25 years. We are truly best friends; we even play a round of golf together from time to time! We have three children. Ryan, a recent graduate of Santa Clara University, is transitioning into the working world and is a passionate cyclist and outdoorsman. Michelle is a high school senior and enjoys volleyball and is involved with student government. Matthew is our seventh grader who stays very busy with music, soccer, acting and enjoying life.

JG: What are some of your hobbies?

CH: My outdoor hobbies include playing golf, hunting and fishing. My most thrilling ‘big’ catch was an 80 lb. Tarpon caught on 25 lb. test in San Juan, Puerto Rico. While indoors I enjoy time in the kitchen with a few specialties and often exploring recipes for the game meat and the fish that I bring home.

JG: How did you get started in the insurance industry?

CH: My father made his career in the insurance industry and I followed in his footsteps. Upon my graduation from Santa Clara University I began my own career with an extensive two year training program with Fireman’s Fund. Upon completion I returned to Santa Barbara to join my father at Ogilvy, Gilbert, Norris and Hill.

JG: What has brought you this far in your career?

CH: Initially I was attracted to the insurance field because of the opportunity to reside in Santa Barbara. At OGNH I was given a desk and told to sell! With my own enthusiasm and the guidance of my father and Mr. Norris, I ‘learned the ropes’. In 1988 I had the opportunity to expand beyond sales and enter into management. I became president at OGNH in 1994. I am proud of OGNH’s development during my tenure and I owe a lot of credit to my many mentors who assisted me along the way. In February of 2006 I choose to move on from the family business and I started Riviera Insurance Services. Starting a new company has been challenging and exhilarating. I have remained in my career because I enjoy what I do and I am continuously learning and expanding myself.

JG: If I were shopping around for another agency, what makes you unique?

CH: Riviera strives to stand above all other brokers by giving our clients the personal attention they deserve. Taking the word “surprise” out of our client’s experience is a goal, unless is a pleasant surprise!

In addition to providing insurance coverage for our clients, we have an incredible wealth of resources. Claims oversight management, loss control, COBRA administration, human resource consulting, legal, banking and accounting are some of the areas in which we have developed excellent networks. We are proud to be of assistance in finding a match that will promote our client’s success in all areas of their business and personal lives.

JG: Do you foresee any big changes in the insurance world?

CH: Absolutely! There will always be changes. Our industry is highly competitive and has a history of rapid changes.

Coping with increasing rates or lack of availability of insurance has changed how some businesses buy insurance. We will continue to see new ways to purchase insurance as a result of the large fluctuations seen in our industry.

JG: What is the word that best describes you?

CH: Focused!

JG: And finally what are the goals of Riviera Insurance Services for this year?

CH: Currently RIS is providing service to 50 clients. As a newly founded business we are proud of those we serve and who have put their trust in us. Of course we hope to expand our client base and in 2007 we hope to double our current size. We have set ambitious goals for the group, but I have a great deal of trust in the team I have gathered and know we can achieve them.