With the recent tremors in the Kansas City area, you might be wondering about potential earthquake damage to your property. We’re not exactly San Francisco, but we have our fair share of earthquake risks. It turns out the Show Me State is the third largest market for earthquake insurance in the country behind California and Washington. Here’s what you need to know.
The Risk
Most recently, magnitude 5+ quakes in Oklahoma have sent tremors throughout the Midwest. According to the Kansas City Star, tremor reports from the November 6 earthquake near Tulsa ranged from Iowa to Texas.
The New Madrid fault, located in southeast Missouri, presents the most direct and significant quake threat in the state. The New Madrid earthquakes of 1811-1812 were the most powerful ever recorded east of the Rocky Mountains. According to the US Geological Survey, the quakes are estimated to have been two to three times larger than the 1964 Alaska earthquake and up to 10 times larger than the 1906 San Francisco earthquake. The Missouri Department of Insurance estimates the fault has a 7-10 percent chance of experiencing a 7.5 magnitude earthquake or higher within the next 50 years, and a 25-40 percent chance of one exceeding magnitude of 6 or higher in the next 15 years.
What does it cover?
Earthquake insurance covers cracks and damage directly caused by quake activity. Damage indirectly caused by earthquakes can be covered through other insurance policies.
Options for Homeowners
Earthquake insurance policies are not included on standard homeowner policy forms. Customers must opt into earthquake endorsements. Deductibles are usually between 10 and 20 percent of the dwelling’s replacement cost limit — around $15,000. This would be paid out of pocket before the insurance company pays the rest of the claim. Some consider this cost too high in comparison with the level of risk.
Reasons for Higher Rates:
- Stone or brick structures
- Multiple stories
- Older homes
- Larger square footage
- Proximity to fault lines
If you want to know more about earthquake insurance, we recommend contacting Kevin Prochaska of Walnut Risk Management.