(Bloomberg) -- The earthquake that struck northernCalifornia yesterday will lead to economic losses of as much as $4billion, fueled by damaged wineries and shuttered businesses thatrely on tourists.

Insurers will probably cover about $2.1 billion, according to anestimate from Kinetic Analysis Corp., which projected total lossesof about twice that sum. Costs borne by the industry may be limitedbecause many homeowners don’t have earthquake coverage,according to the Insurance Information Institute.

“The main source of claims could well be commercial claims,those coming from wineries and vineyards and other commercialinterests,” Robert Hartwig, the institute’s president, said in aninterview today. “It will take a while for the business owners tosort this out.”

The temblor, the strongest in Northern California in 25 years,hit the Napa region north of San Francisco at about 3:20 a.m. localtime yesterday, crumpling historic buildings, cracking roads andinjuring more than 200 people. The quake left many in the regionwithout power and water, and California Governor Jerry Browndeclared the zone a disaster area.

In Napa, debris and broken glass littered the sidewalks in frontof restaurants, wine stores, and antique shops. The city updatedthe number of buildings “red-tagged” as being uninhabitable to 33,including the Napa Senior Center. PG&E Corp. crews checkedabout 100 reports of gas leaks and odor and determined that thereare no more leaks, according to an update posted to the city’swebsite late yesterday.

Boutique Hotels

Catastrophe-modeler Eqecat estimated there would be $1 billionof insured losses, with as much as half that figure coming fromresidential claims. The cost for the industry could climb becauseof coverage that protects commercial policyholders from lostrevenue, Eqecat said. Such losses have fueled higher- than-expectedclaims from other recent catastrophes including superstorm Sandy in2012.

The Napa region “is dotted with upscale and luxury boutiquehotels, spas and inns,” Eqecat said. “Business interruption lossesare a major concern.”

The upcoming three-day weekend, which includes the Labor Dayholiday on Monday Sept. 1, is a major travel period in the U.S.About 34.7 million Americans will take a trip at least 50 miles (80kilometers) from home next weekend, the highest figure for theholiday since 2008, according to a projection from AAA.

‘Completely Unknowable’

“I don’t know how interrupted the winery tourism season is goingto be,” Meyer Shields, an analyst at Keefe, Bruyette & Woods,said by phone. For an insurer dealing with a commercial customer,“the question is, ‘how interrupted are your operations,’ and that’scompletely unknowable at this point.”

The Napa-Sonoma area is home to one of California’s best- knownwine-growing regions. Napa County has 789 licensed wineries whichhad sales of $5.5 billion in 2011, according to the Napa ValleyVintners Association, a trade group.

“It was a significant earthquake” city manager MikeParness said in an interview. “Given the magnitude and the reportsof damage, this is going to take some time to get back from.”

Landmarks Damaged

The facade on the 113-year-old Goodman Library building, home tothe city’s historical society and landmarks commission, collapsedduring the quake, sending chunks of concrete onto the sidewalkbelow. The local post office had a 12-foot crack torn into thecorner of the building. PG&E said about 150 customers werewithout power, down from an earlier total of 70,000.

Napa said 90 water lines need repair, up from an earlier countof 60, and advised that customers who lost service for any timeshould boil tap water before drinking or using it for cooking.

In California, where most of the costliest U.S. earthquakesoccurred, just 12% of residents are protected against that risk,which is excluded from a standard homeowners’ policy, according toIII, an industry group. The figure is about half that in the Napaarea, Hartwig said,

Residential earthquake coverage provides protectionfrom losses tied to shaking and cracking, while costs tied to firesand water damage from a temblor would be covered under a standardpolicy. The publicly managed, privately fundedCalifornia Earthquake Authority is the main provider ofthe policies in California.

Hurricane Season

The KBW Insurance Index rose 0.8% at 12:39 p.m. in New York.Zurich Insurance Group AG, American International Group Inc. andAce Ltd. are among the companies that sell the most coverage in theregion, according to data compiled by KBW’s Shields.

Matt Gallagher, an AIG spokesman, said it’s too early to discussthe New York-based insurer’s costs from the quake.

“AIG is focused on assessing the situation and working with ourcustomers in the affected area,” he said by email.

Even after the quake, insured catastrophe losses are runningbelow normal for this time of year, Hartwig said. Through the endof June, U.S. catastrophe costs were about $9.1 billion. Still,claims are often higher in the third quarter, which is the peak ofhurricane season.

“It was the most powerful earthquake I’ve ever felt,”said Dianne Cameron, a 45-year-old Napa resident. “It was liftingthe bed off the floor so much that I had to hold onto the mattressso I wouldn’t fall off. It was as if someone picked up the houseand started shaking it.”

--With assistance from Nancy Moran and Mary Childs in NewYork and Alison Vekshin in Napa.

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