Napa quake costs could reach $4 billion

SACRAMENTO -- Sunday's Northern California earthquake 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 yesterday. "It will take a while 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, about 3:20 a.m. local time Sunday, crumpling historic buildings, cracking roads and injuring more than 200 people. It left many in the region without power and water, and 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. The city updated the number of buildings "red-tagged" as being uninhabitable to 33, including the Napa Senior Center. PG&E Corp. utility crews checked about 100 reports of gas leaks and odor and determined that there were no more leaks.

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."

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

In the Napa-Sonoma area, home to one of California's best-known wine-growing regions, Napa County alone has 789 licensed wineries that had $5.5 billion in sales in 2011, according to the Napa Valley Vintners Association.

"Given the magnitude and the reports of damage," Napa city manager Mike Parness said, "this is going to take some time to get back from."

The facade on the 113-year-old Goodman Library building, home to the city's historical society and landmarks commission, collapsed during the quake, sending chunks of concrete onto the sidewalk below. The local post office had a 12-foot crack torn into the corner of the building. PG&E said about 150 customers were still without power, down from an earlier total of 70,000.

Napa said 90 water lines need repair, up from an earlier count of 60, and advised that customers who lost service for any time should boil tap water before drinking or using it for cooking.