Demand for quake insurance up
BY MICHAEL OVERALL World Staff Writer
Tuesday, November 08, 2011
11/08/11 at 6:29 AM
Six months ago, noting an increase in geological activity across Oklahoma, Insurance Commissioner John Doak began urging home-owners to consider buying earthquake coverage, but his warnings attracted little attention. Until now.
Standard policies almost never include earthquake damage, and only a tiny fraction of homeowners bother to take out additional coverage.
In fact, earthquake coverage is so rare that only a handful of insurance companies even offer it in Oklahoma, said Glenn Craven, a spokesman for the Oklahoma Insurance Department.
"It's not as widely available as we would like it to be," Craven said. "In a lot of cases, people have to go to a second carrier to get it."
Last April, as state officials took part in a regional exercise that was described as "the largest earthquake drill in central U.S. history," the Insurance Department issued a report that urged Oklahomans to review their policies.
And in October, after another series of tremors, the department issued a "consumer advisory" to urgehomeowners to consider coverage.
The warnings, however, went practically unnoticed until Saturday's record-breaking quake.
Suddenly, the phones are ringing. But homeowners and businesses will have to wait for earthquake policies.
To allow time for aftershocks, insurance companies enforce a waiting period - typically at least 30 days after a significant quake - before issuing new coverage.
"People need to weigh the costs and the risks," Craven said, "and make an informed decision about what is covered and what isn't."
Oklahoma doesn't keep records on how many property owners carry earthquake coverage.
But officials know that insurance providers collect roughly $6.74 million a year in direct premiums for earthquake policies in the state.
That figure is hard to translate into an estimated number of individual policies.
"But it's fair to say that the number is very, very low," Craven said.
Even in earthquake-prone California, where annual premiums can run more than $700, only 12 percent ofhomeowners have coverage, according to the California Earthquake Authority.
In low-risk areas like Oklahoma, earthquake premiums for a typical house will cost less than $150 a year, according to the state Insurance Department.
But the deductible can be steep, often calculated as 10 percent or more of the property's replacement value.
Michael Overall 918-581-8383