Perhaps a surprising thought at first blush, but Oklahoma residents have recently been advised to make sure Earthquake Coverage is included in their property damage insurance. The United States Geological Survey – the entity that tracks earthquakes and other seismic activity – released a statement indicating there are almost as many earthquakes rattling Oklahoma as California this year. This major increase in seismic shaking led to a recent and rare earthquake warning in Oklahoma from both the USGS and the Oklahoma Geological Survey.
In the May 5, 2014 joint statement, the agencies said the risk of a damaging earthquake — one larger than magnitude 5.0 — has significantly increased in central Oklahoma.
Geologists don’t know when or where the state’s next big earthquake will strike, nor will they put a number on the increased risk. "We haven’t seen this before in Oklahoma, so we had some concerns about putting a specific number on the chances of it," Robert Williams, a research geophysicist with the USGS Earthquake Hazards Program in Golden, Colorado, told Live Science. "But we know from other cases around the world that if you have an increasing number of small earthquakes, the chances of a larger one will go up."
Earthquake Insurance in Oklahoma
In response to these recent announcements relating to earthquakes, Oklahoma Insurance Commissioner John Doak advised Oklahomans to acquire Earthquake Insurance. Although likely well-versed in disaster preparedness due to frequent hail storms, tornadoes, and wild fires, earthquakes are likely a relatively new experience for most Oklahomans.
Here are some points Oklahomans should know about Earthquake Coverage:1
(1) Very few Oklahomans have Earthquake Coverage.
According to Commissioner Doak, less than 1% of Oklahomans carry Earthquake Coverage.
(2) Many may not know they don’t have it.
The Oklahoman‘s Paul Monies reports that many policyholders he interviews do not know that Earthquake Coverage is either an endorsement added to their existing insurance policy.
As a result of the earthquakes and complaints from constituents, State Rep. Mike Shelton, D-Oklahoma City, says he will refile a bill hoping to require insurance companies to alert Oklahomans whether their policies cover earthquake damage. Shelton filed the bill last year, as well. Perhaps not surprisingly, Shelton says the measure was opposed by the insurance industry and died in a House committee.
(3) Earthquake Coverage is inexpensive.
Commissioner Doak says a typical Oklahoma homeowner will likely pay $100 to $150 per year for earthquake coverage. Commissioner Doak further notes that earthquake policies usually cover structure repairs, damage to personal property, and debris removal.
(4) Earthquake deductibles are high.
The Oklahoman‘s Monies further reports that deductibles for earthquake damage claims are usually higher than standard homeowners’ insurance claims — usually 5 to 10 percent of a home’s value. The median home value in Oklahoma City remains $120,000. With a 10 percent deductible, of course, out-of-pocket costs to repair earthquake damage would be $12,000.
(5) You may have to wait months for coverage.
Due to the likelihood of aftershocks, most insurance companies enforce a post-earthquake “lockout period” that has to expire before homeowners can add coverage. The moratorium is usually 30-60 days, but could be as high as 90 days.
The size of an earthquake that triggers a lockout period varies between insurers, too. Lance Singleton, the Chief Financial Officer for the Oklahoma Agency Alliance, says many insurers start the clock after a 4.0-magnitude or greater temblor.
What Does This Mean to Me?
As reiterated in most of my blog entries, I again encourage Oklahomans to read their insurance policy and determine if they have Earthquake Coverage. To borrow a line from several colleagues, one way to help make sure you DON’T suffer an earthquake is to go buy plenty of Earthquake Coverage!
Motivational Poster of the Day
1 Joe Wertz, stateimpact.npr.org