Few Earthquake Insurance Policies Sold in Oklahoma

Moratoriums on New Coverage in Effect

About $6.7 million in earthquake insurance is written annually in Oklahoma, according to state insurance regulators. Only about 1 percent of homeowners carry earthquake insurance and earthquake damage typically is not covered in homeowners policies.

The recent spate of tremblors — including the 5.6 magnitude quake that occurred near Oklahoma City on the night of Nov. 5 — may change those statistics.

Nearly two dozen earthquakes were reported in Oklahoma over the Nov. 5 weekend. The strongest, with a magnitude of 5.6 and a focal depth of just three miles below the surface, was centered about 44 miles east of Oklahoma City. A foreshock of M4.7 had struck 21 hours earlier.

The fall of a spire from a five-story, 1915-era building on the campus of St. Gregory’s University and the buckling of parts of local Highway 62, were the only incidents of major damage reported from the M5.6 quake, according to catastrophe modeling firm AIR Worldwide. Additional reported damage included collapsing chimneys and objects falling off interior shelves. There was one roof collapse and a municipal building ventilation system was damaged, AIR Worldwide noted.

The 5.6 magnitude earthquake is the largest recorded earthquake to occur in Oklahoma. The previous record was set in 1952 when a magnitude 5.5 earthquake occurred in El Reno City, according to catastrophe modeler RMS.

Oklahoma has experienced heightened seismic activity since 2009 in terms of the frequency of earthquakes recorded, according to the Oklahoma Geological Survey (OGS).There typically were about 50 earthquakes a year until 2009. In 2010, 1,047 quakes shook the state.

Two minor injuries were reported from the quakes by the Oklahoma Department of Emergency Management, the Associated Press reported. No one was hospitalized.

The early November earthquakes were felt in Arkansas, Kansas, Missouri and Texas.

The Oklahoma Department of Insurance said the state’s top five carriers for residential earthquake insurance are: Travelers Group; American International Group; State Farm Group; Zurich Insurance Group; and Liberty Mutual Insurance Group.

The cost of an earthquake insurance policy in Oklahoma varies depending on several factors, regulators said.

Many insurance consumers in Oklahoma who asked about earthquake insurance in the wake of the recent tremblors were surprised to learn that they could not immediately buy any, the ODI noted.

Due to waiting periods — or moratoriums — on writing new coverage, most customers inquiring about quake insurance have been turned away.

“Moratoriums vary depending on the company in question,” said Oklahoma Insurance Commissioner John D. Doak. “We’re finding that in some cases consumers can get coverage right away or very soon, but they might pay a premium price to get it. Those who are willing to wait a few days or a full month are often able to get a much more attractive price on the coverage.”

Establishing a moratorium on selling new coverage is a typical response by an insurance company in the wake of larger earthquakes, which frequently are followed by numerous and potentially damaging aftershocks.

“The time to buy any kind of insurance is in advance of the need,” Doak said.

The department said anecdotal evidence and information from a few major insurance providers suggests that consumers in the state are paying anywhere from $100 to $500 per year for new earthquake coverage, depending on the company, what the policy covers (which can also vary) and the value of the home. Deductibles are ranging from 2 percent up to 10 percent of the home’s estimated value or perhaps higher. A small number of companies have no waiting period in place and some a very brief moratorium — one of the state’s biggest insurers requires existing customers to wait only 72 hours after the last 5.0 shock before adding an earthquake endorsement. In other cases, companies have moratoriums of 30 days or more before writing new earthquake coverage in the affected area, the department said.

Doak advised homeowners to shop around for the best coverage at the best price and least amount of wait time to buy earthquake insurance.

Topics Catastrophe Natural Disasters Oklahoma