Study Puts Quake Toll Up Another $6 Billion : Disasters: Researchers add that to the original estimate of $20 billion lost by companies. ‘Business interruptions’ are cited.

Business losses caused by the 1994 Northridge earthquake are about $6 billion higher than the original estimate of $20 billion, according to a USC study released Friday.

In addition to structural and material damage, further losses resulted from factors traditionally not measured, such as “business interruption” costs, USC urban planning and economics professors Peter Gordon and Harry W. Richardson said.

The study found that employees in the five-county Los Angeles area and throughout the world lost a significant amount of time because of the earthquake.

Despite a recent Dun & Bradstreet report saying Southern California’s economy is experiencing an economic upsurge, and reports that many businesses are still able to function in the aftermath of the earthquake, the study found that business interruptions were a heavily unreported burden.

Many Los Angeles residents had a harder time getting to work because of damaged roads. Others spent large amounts of time attending to earthquake-ravaged homes or chasing down insurance repair figures.

“If I had to add up all the hours I spent with the insurance company, the Small Business Administration and just getting my house back in order, I would say I lost about 150 productive hours,” said Richard H. Close, president of the Sherman Oaks Homeowners Assn., the largest homeowners group in the San Fernando Valley, with over 1,900 members. “Just multiply that and you have a lot of people in trouble. And a lot of people were worse off than me.”

Those factors, and with others such as customers’ lack of access to damaged buildings and interruptions in utility services, push the actual cost of the temblor up by at least 22%, the professors said. The quake was already estimated to be the costliest in U.S. history and the second-costliest natural disaster, after Hurricane Andrew in Florida.

“It’s just a common-sense thing,” Gordon said. “If you just talk about the buildings that are down, then you are missing a big part of the picture.”

Gordon and Richardson initially devised a hypothetical earthquake study along the Newport-Inglewood fault zone, which runs roughly along the San Diego Freeway between Orange County and the Westside. But when the Northridge earthquake struck, it was the perfect opportunity to conduct a real-life test of their idea, Gordon said.

In conducting the survey, they contacted 504 businesses, including 389 in Los Angeles, Santa Monica, San Fernando and Glendale, to gauge interruptions in day-to-day business affairs.

The purpose of the study is to help government agencies and insurance companies prepare for the next big quake by estimating the potential total costs, not just structural damage.

“Information about the possible damage, including business interruption, can be extremely valuable in developing a strategy of risk management to prepare for future earthquakes,” the report says in describing the study’s usefulness to the public and private sectors.

The survey found that at least a third of the additional $6 billion in losses hit businesses in Southern California. Not surprisingly, the areas hit the hardest were near the epicenter, in Chatsworth and Northridge.

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“People supply and purchase things to the Northridge area, and if a Northridge company is not open, then that means both lose money,” said Bill Davis, a research associate who conducted the phone surveys.

Davis also said that when an entire apartment building was shut down after the quake, that meant businesses in the area lost crucial customers, forcing some out of to close their doors.

More important, the study found that, on average, respondents said they missed at least eight out of roughly 260 annual working days handling matters linked to the earthquake, Davis said.

Because Southern California is such a vital financial center, an earthquake here not only affects people cleaning up their yards, but also consumers and businesses worldwide, the report says. In fact, Gordon and Richardson said that at least $1.5 billion in business-related damage was suffered outside the region.