Shopping center insurance in the Bay Area

What an underwriter asks about a Bay Area center

• Which fault, how farThe USGS lists the Hayward, Rodgers Creek, Calaveras and San Andreas faults as the ones most likely to produce a damaging earthquake in the region between 2014 and 2043.
• The groundThe California Geological Survey maps zones where liquefaction, landslides or surface fault rupture are more likely to add to earthquake damage. Underwriters look the address up.
• Construction and ageOlder concrete and tilt-up retail buildings behave differently in an earthquake than newer steel or wood frame, and San Francisco is now screening them.
• Tenant mixCooking, alcohol, cannabis, late hours and vacancies each change the fire and liability picture.
• Security recordLighting, cameras, patrols and what has been reported on the premises.

The policy structure is the same as for any center (how a shopping center program is built). What follows is what changes here.

Hayward and San Andreas: earthquake is its own policy

In its 2016 fact sheet on the Bay region forecast, the USGS gives a 33 percent probability of a magnitude 6.7 or larger earthquake on the Hayward or Rodgers Creek faults and 22 percent on the San Andreas between 2014 and 2043. The Hayward fault runs through the East Bay; the fact sheet notes that a trench in Fremont showed 12 large earthquakes in about 1,900 years, spaced roughly 100 to 210 years apart, and that the last one was in 1868.

Standard commercial property policies generally exclude earthquake. The California Earthquake Authority sells only residential policies (homeowners, condo unit owners, mobilehome owners and renters), so a retail owner buys earthquake in the commercial market, as a separate policy or a difference-in-conditions policy with a percentage deductible. A lender may require it and usually wants a seismic report first. How earthquake insurance works in California.

Two things I check before quoting earthquake on a center: whether the limit follows the building value the property policy uses, and whether loss of rents after an earthquake is included, because the property policy’s rent coverage will not respond to an excluded cause.

Liquefaction zones and older concrete buildings

The California Geological Survey calls its mapped areas Earthquake Zones of Required Investigation. Cities and counties must withhold building permits inside them until a site-specific geologic or geotechnical study is done, and CGS says its completed maps cover parts of San Francisco, Santa Clara, San Mateo, Alameda and Contra Costa counties. The reason is 1989: the USGS records that liquefaction severely damaged buildings in San Francisco’s Marina District in the Loma Prieta earthquake, and that the worst damage fell on older structures on poor ground.

For a center on bay fill or young creek deposits, an earthquake underwriter will ask for the soils report and the zone status. Being in a zone does not make a property uninsurable; it changes the deductible, the price and how many markets will look.

Construction matters as much. San Francisco’s Concrete Building Safety Program names two types it considers potentially dangerous in a large earthquake: non-ductile concrete buildings and rigid-wall-flexible-diaphragm buildings, the one-story tilt-ups that the city notes can be grocery stores. Under legislation passed in May 2025, owners who received a notice must submit a screening form by June 9, 2027. If your center is in that group, send me the notice and whatever the engineer has filed.

Tenant mix: restaurants, cannabis retailers and vacancies

The rent roll is the first thing a property underwriter reads.

• Restaurants bring cooking exposure. Expect questions about hood and duct cleaning, the suppression system and its service dates, and whether the tenant sells alcohol. What a restaurant tenant should carry.
• Cannabis retailers need a state license from the Department of Cannabis Control before selling, and each city or county decides whether to allow them at all, so the roster differs from one Bay Area city to the next. Many standard property insurers will not write a building with a cannabis tenant; those centers usually go to specialty markets. Property insurance with a cannabis tenant.
• Vacant units can trigger vacancy conditions in a property policy once a building is mostly empty for an extended period. Tell me before a large tenant leaves, not after.
• Anchors and pads under ground leases may insure their own buildings. The lease decides, and the policy has to match it.

Theft, vandalism and liability for crime on the property

Underwriters across the Bay Area ask about break-ins, glass breakage, graffiti and catalytic-converter or vehicle theft in the lot. I do not quote crime figures here; what counts is your own loss runs and police calls, plus the answers on lighting, cameras, roll-down gates and after-hours patrols. A center with a clean five-year record and documented security has more markets to choose from.

On liability, the leading California case arose in a shopping center. In Ann M. v. Pacific Plaza Shopping Center (1993), the California Supreme Court held that a landlord’s duty includes taking reasonable steps to secure common areas against foreseeable criminal acts of third parties, but that a duty to hire security guards requires a high degree of foreseeability, which the court said can rarely, if ever, be shown without prior similar incidents of violent crime on the premises.

The practical point for insurance: keep an incident log, act on what it shows, and carry liability limits and an umbrella sized to a serious injury claim. Some liability policies carry assault and battery exclusions or sublimits; I read for those before you sign.

Lessor’s risk, tenant certificates and who insures what

Most strip malls are written as lessor’s risk: the owner insures the building, common areas and the owner’s liability, and each tenant insures its own operations and contents. How lessor’s risk coverage works. Underwriters expect the leases to require tenants to carry general liability, name the owner as additional insured and provide a current certificate.

A certificate alone gives the owner no rights; the additional insured endorsement does. Collect both at lease signing and at every renewal, and check that the tenant’s policy has not lapsed. Check a tenant certificate.

Ordinance or law and loss of rents

Much Bay Area retail was built decades ago. When an older building is badly damaged, the city can require the repair to meet current code, including seismic, accessibility, energy and sprinkler requirements, and in a mapped hazard zone a geotechnical investigation before permits issue. A basic property policy pays to put back what was there. Ordinance or law coverage pays for the undamaged portion that must be demolished, the demolition, and the added cost of building to current code. I ask for it on every older center.

Loss of rents replaces the rent you were collecting while the space cannot be occupied. Size the period to a realistic Bay Area rebuild, including plan check and permits, and add an extended period for re-leasing. Check whether leases let tenants stop paying or terminate after a casualty; that decides how much rent is actually at risk. More on commercial property coverage.

When standard markets say no

For a center that standard and surplus lines markets decline, usually for brush exposure in the hills or a difficult loss history, the California FAIR Plan writes retail buildings as a last resort. Its commercial policy is named-peril (fire, lightning and internal explosion), with vandalism and malicious mischief available as an option, so it needs a companion policy for liability and the other causes of loss.

What to send me

• Address, year built, construction type, square footage and number of buildings, with roof age and any seismic work.
• The rent roll with each tenant’s business, lease dates and any vacant units.
• Lease insurance clauses and current tenant certificates with additional insured endorsements.
• Seismic and soils reports, liquefaction or fault zone status, and any city screening or retrofit notice.
• Security details: lighting, cameras, patrol contract, and the incident log.
• Five years of loss runs and current declarations pages for property, earthquake, liability and umbrella.
• Lender requirements, if the loan documents call for earthquake or specific limits.

Common questions

General information about insuring retail property in the San Francisco Bay Area as of November 2026, not legal or engineering advice. Earthquake probabilities are from USGS Fact Sheet 2016-3020; hazard zones, city screening programs and cannabis rules change, so confirm your property’s status with the California Geological Survey maps and your city, and your liability duties with counsel. Coverage depends on underwriting and the terms, conditions and exclusions of the policy actually issued.