Liability for Earthquake Damage?

The Federal Council is submitting a constitutional amendment for public comment that is intended to establish the basis for national financing of earthquake damage. Under this amendment, property owners could be required to jointly finance damage to buildings in the event of an earthquake.

In early December, the Federal Council launched a consultation process on an amendment to the Federal Constitution that would grant the federal government the authority to introduce a national solution to the issue of financing building damage caused by earthquakes.

To finance building damage, the federal government would be granted the authority to collect a earmarked contribution from building owners in Switzerland in the event of an earthquake resulting in damage. This contribution would not exceed 0.7% of the building’s insured value. This would make approximately CHF 22 billion available to cover damages in the event of an earthquake. Buildings valued at over CHF 25 million would be exempt from both the contribution requirement and the right to receive benefits. This is intended to eliminate the need for time-consuming assessments of large building complexes.

From the perspective of property owners, the proposed contingent liability results in predictable and manageable costs. The risk amount in the event of a claim is 5% of the building’s insured value, but at least CHF 25,000; the risk amount in the event of a premium payment is the aforementioned maximum of 0.7% of the building’s insured value. From a macroeconomic perspective, significant risks are covered primarily by property owners and lenders.

Source: SVIT Chamber of Brokers