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California wine country quake losses seen in the billions

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[August 26, 2014]  By Christina Farr and Robin Respaut
 NAPA Calif. (Reuters) - A strong earthquake that jolted residents of California's Napa Valley wine country from their beds on Sunday caused insured property damage likely in the hundreds of millions of dollars, but the region's total economic losses will be several times that, experts said on Monday.

The magnitude 6.0 quake, the biggest to hit California's Bay Area in 25 years, struck before dawn on Sunday near Napa, injuring more than 200 people and damaging dozens of buildings in the picturesque community northeast of San Francisco.

At least 49 buildings in Napa, a town of 77,000 residents, were "red-tagged" as unsafe to enter, including the Napa Senior Center and the local courthouse, and that figure was expected to rise as additional structures were inspected, officials said.

The quake struck just as the grape-harvesting season was getting under way in Napa County, a significant wine-producing area that generates thousands of jobs in a region famed for its Cabernet Sauvignon, Pinot Noir, Chardonnay and Sauvignon Blanc.

The full extent of industry damage had yet to be assessed, but one Napa winery spokesman said the quake would do little to harm what was otherwise expected to be a superb 2014 vintage.

In Napa, a number of building facades crumbled in the historic district, and numerous wine shops were strewn with broken bottles. Most of the red-tagged buildings were damaged despite having been retrofitted to better withstand quakes, officials told a news conference.


Disaster modeling firm CoreLogic estimated that total insured economic losses could range from $500 million to $1 billion, though it acknowledged "a fair amount of uncertainty" around those numbers.

Roughly a quarter to half of that projection could come from residential losses, CoreLogic said, noting that $1.8 billion in insured claims were paid to policyholders after the magnitude 6.9 Loma Prieta earthquake struck San Francisco in 1989.

The Insurance Information Institute in New York likewise estimated that insured quake damage would probably measure in the hundreds of millions of dollars, although overall economic losses will likely run several times higher.

That is because only about 6 percent of Napa area homes are covered by earthquake insurance, said Robert Hartwig, president and economist at the institute.


Parts of Napa's wine industry ground almost to a halt on Monday as workers raced to clean up and salvage their product.

Managers at Napa Barrel Care, which stores product for a number of area vintners, were busy siphoning up spilled wine and scrambling to find barrels to store the spoils until they could disposed of, owner Mike Blom said.

Behind him loomed a mountain of barrels, many shattered, that had fallen over and piled up during the temblor, and the pungent odor of fermenting wine hung in the air.

"It's a big mess right now," said Rick Ruiz, operations director for the wine retailer TwentyFour wines, one of Blom's customers. He said workers were wearing masks to protect from carbon monoxide poisoning. "It's a logistical nightmare."

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At Napa's Hess Collection winery, two 10,000-gallon wine storage tanks had crumpled like tin cans, spilling the contents into a courtyard usually open to visitors and staining the pavement red, spokesman Jim Caudill said.

Chief marketing officer Derek Bromley said lost inventory included a supply of 2013 Mount Veeder Cabernet that sells for $100 a bottle.

Also hard hit was the landmark, 19th-century wooden building that houses the tasting room and offices of Trefethen Family Vineyards. The first floor of the three-story building was shifted 3 to 4 feet by the quake, spokesman Terry Hall said.


Despite damage on the premises, the timing of the quake helped Trefethen and other wineries escape major production setbacks because it struck after the 2013 vintage had been bottled and sent off for delivery but before most of the grapes were ready to be picked.

Hall said 2014 "is going to be a pretty spectacular vintage for the whole valley."

No quake-related fatalities were reported, although more than 200 people suffered mostly minor injuries. A child who suffered multiple fractures after a fireplace fell on him was among three people seriously hurt, local battalion Fire Chief John Callahan said on Sunday.

Six fires erupted, apparently from severed gas lines, including one blaze that destroyed six mobile homes, he said.

Some 600 properties in town remained without water on Monday and several streets were closed due to debris. Area public schools were closed, but power was restored to some 70,000 homes and businesses by midday on Monday, Pacific Gas & Electric spokesman Jeff Smith said.


The tremor was the largest earthquake to hit the Bay Area since the Loma Prieta quake, which killed 63 people and caused $6 billion in property damage.

(Writing and additional reporting by Steve Gorman in Los Angeles; Additional reporting by Deepa Seetharaman and Anjali Athavaley in San Francisco and Fiona Ortiz in Chicago; Editing by Leslie Adler)

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