Great Shakeout Highlights Declining Missouri Earthquake Insurance Market

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Millions of Americans will participate in the Great Shakeout on October 21, a day dedicated to earthquake education and awareness. Every year on the third Thursday in October, the Great Shakeout encourages schools and workplaces to practice earthquake safety techniques.

The Grand Shakeout is also a reminder of the importance of obtaining insurance against earthquakes, particularly in eastern Missouri, where residents face a higher risk due to the seismic zone of New Madrid. The approximately 150-mile-long fault zone covers much of southeastern Missouri. He leaves the state standeel along the Mississippi River to the St. Louis metro area at the highest risk.

The New Madrid area last experienced strong earthquakes in the winter of 1811-1812. Experts estimate that the severity of these earthquakes ranged from 7.0 to 7.5. An earthquake today of similar magnitude would produce insured losses of $ 120 billion, according to risk modeling firm AIR Worldwide.

Despite the significant risk that NMSZ poses to Missouri, the state has seen a rapid decline in the use and availability of earthquake insurance coverage over the past two decades. A 2020 Missouri Department of Commerce and Insurance (DCI) report found that only 12.7% of homes in the New Madrid area have earthquake insurance, up from 60.2% in 2000. .

In 90 of Missouri’s 116 counties, less than 20% of homes have earthquake coverage. In just four counties, at least half of the homes are insured against earthquake damage, including Cape Girardeau, St. Charles, St. Louis, and Jefferson counties, all of which are in the New York area. Madrid.

The cost of earthquake insurance has risen 760% since 2000 as insurers have increasingly withdrawn from high-risk areas of the state or subjected those areas to stricter underwriting standards. .

According to DCI’s Missouri Residential Earthquake Coverage Report, nearly 20% of the New Madrid earthquake market does not offer coverage with a deductible below 25% of the value of the insured property. .

Less than 2% of the market offers policies with deductibles as low as 5%, compared to 43% of the seismic market in the rest of the state.

Insurers require policyholders to keep a deductible, or the amount of property damage the policyholder must pay, before insurance coverage is available. Earthquake-resistant policies often specify a deductible as a percentage of the value of the insured property.

Only 1.8% of the New Madrid area market offers policies with a deductible as low as 5%, while 67.2% of the market offers policies with a deductible as low as 10%.

According to the DCI, earthquake insurance covers:

  • Repairs needed due to earthquake damage to a residence (this may cover other structures not attached to a residence, such as a garage)
  • Personal property from earthquake damage (this can cover increased costs to meet current building codes and costs to stabilize land under a residence)
  • The cost to remove the debris.
  • Additional living expenses that people may have while their home is being rebuilt or repaired.

Earthquake insurance generally does not cover fire, land, vehicles, pre-existing damage, or external water damage.

The subjects
Disaster Natural Disasters Market Trends Missouri Earthquake

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