EARTHQUAKE & FLOOD INSURANCE
Dean Derleth, City Attorney
Spring Financial Workshop
April 23, 2026
Should City Obtain Coverage?
City of Corona 2
ASK
Discuss whether the City should
consider obtaining insurance
coverage for earthquake and flood
events?
City of Corona 3
TODAY’S THEME
MONEY RISK
TOLERANCE
City of Corona 4
EQ & FLOOD RISK ANALYSIS
EARTHQUAKE
PROPERTIES PROBABLE MAX LOSS AVG ANNUAL LOSS
$68M - $142M $939K - $1.7M ALL CITY PROPERTIES
802 Locations; $807M TIV
$34M - $64M $441K - $795K KEY CITY PROPERTIES
76 Locations; $456M TIV
FLOOD
PROPERTIES PROBABLE MAX LOSS AVG ANNUAL LOSS
$15M $279K ALL CITY PROPERTIES
802 Locations; $807M TIV
$0 $367.00 KEY CITY PROPERTIES
76 Locations; $456M TIV
Basis: Moody's RMS and Verisk AIR Worldwide
City of Corona 5
SOME KEY CITY PROPERTIES
City Hall
City Library
Senior Center
PD Headquarters
FD Headquarters (EOC)
UD Headquarters
Corporate Yard
Many UD Facilities
• Desalter & Facilities
• Other 725 Properties
• Treatment Plants
• Water Tanks
• Booster Pumps
• Corporate Yard
LIST IS
ADJUSTABLE AS DESIRED
City of Corona 6
PRELIMINARY PROPOSALS (EQ & FLOOD)
ALL CITY PROPERTIES
COVERAGE LIMIT APIP ARROWHEAD*
$10M $954K $554K
$25M $1.96M $1.07M
$50M $2.24M $1.55M
5% ($100K MIN) / 10% PRE-1950
$100K FLOOD / $5M BIOSOLIDS
5% ($100K MIN) / $5M BIOSOLIDS
$100K FLOOD / $5M BIOSOLIDS DEDUCTIBLE
* ARROWHEAD = $10M FLOOD LIMIT ON ALL PROPOSALS. NO HIGH HAZARD - ZONE 10 ONLY.
KEY CITY PROPERTIES
COVERAGE LIMIT APIP ARROWHEAD*
$10M N/A $414K
$25M N/A $698K
$50M N/A $904K
City of Corona 7
PARAMETRIC EQ INSURANCE
What Is It?
Parametric (Index-Based) Insurance
“You Shake We Pay”
Trigger = Shake Intensity (PSA03) as reported by USGS Shakemap at the Trigger Location
Single Largest PSA = Policy Limit % Payout
Benefits
Cheaper
Any Economic Loss (Not Just Property)
No Deductible
Quick Pay
Can Cover What FEMA Won’t Cover
WHAT IS PSA?
INTENSITY OF GROUND SHAKING
MEASURED MILES FROM EPICENTER
MEASURED MULTIPLE PLACES IN CITY
City of Corona 8
HOW IT WORKS?
PARAMETRIC INSURANCE
Payouts based on the measurable intensity of an event, not damage.
COVERAGE TRIGGER
By pre-defined parameters, such as ground shaking at agreed locations.
PAYOUT
Scales with the event’s intensity and the agreed payout schedule.
ATTESTATION
Confirm only that actual financial impacts at least equal payout.
NO DEDUCTIBLES, SUB-LIMITS, EXCLUSIONS, OR ADJUSTERS
City of Corona 9
PRELIMINARY PARAMETRIC PROPOSAL
FORTEGA/PALMS/LLOYDS OF LONDON
MEASUREMENT LOCATIONS 35 35 35
LIMIT (LOCATION & AGGREGATE) $1.3M / $22.5M $1.3M / $22.5M $1.3M / $22.5M
OPTIONS OPTION A OPTION B OPTION C
PGA MIN & MAX 35 – 105 45 – 115 55 – 125
% PAYOUT (EVERY 5 PSA) 5% - 100% 5% - 100% 5% - 100%
PREMIUM $1.26M $969K $747K
City of Corona 10
Recommendation
Consider and discuss high premiums, as well as Average Annual Loss estimations from Moody's RMS and Verisk AIR Worldwide.
As an alternative, consider establishing a Catastrophic Event Fund to self-insure for such events.
Questions?