Do they need earthquake insurance? Forbes Consultant

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Near the Mississippi River lurks a crack in the earth’s crust. Geologists say it could travel, push dirt 60 feet into the air, kill nearly 1,000 people and topple Elvis’ Graceland Mansion in Memphis.

It has already exploded, and more than once. In 1811 and 1812, when a few pioneers lived here, the so-called “New Madrid Fault” caused an earthquake with enough power to stir up teacups in distant New England. By some accounts, the 7.5-magnitude earthquake caused the Mississippi River to flow backwards. It rivaled that infamous San Francisco of 1906 as the largest bone clipper in the continental United States, and it happened—not once—but three times during one dark winter.

Could it happen again? Experts are divided on both if and when. But the most recent activity in this area of ​​southern Missouri – often known as “Bootheel” – occurred in 2017 and involved a 3.7-magnitude shock. He also reminded geologists in neighboring states, including Alabama, Arkansas, Illinois, Indiana, Kentucky, Mississippi and Tennessee, that a large, brittle scar remains in the ground.

“An earthquake with a magnitude of 7 similar to New Madrid will affect nearly 12 million people and cause at least $200 billion in damage,” Polly Sturgeon, Indiana University’s Geological and Water Survey coordinator, said in a webinar this year. This is bigger than Hurricane Katrina, and it is the largest hurricane in terms of damage that has ever hit the United States

Ring of Fire – or “Crack”

Most people do not see Central America as the epicenter of earthquakes. It’s not in the infamous volcanic “Ring of Fire” that circles the west coast across the San Andreas Fault, moving up into Alaska and then crossing the Pacific Ocean to send tidal waves crashing into Japan. Earthquakes in California, such as the devastating Northridge earthquake near Los Angeles, or earthquakes in Alaska, are caused by the grinding of massive tectonic plates beneath the Earth’s surface and account for 95% of seismic activity.

“But our region in the central United States is No. 3 for earthquake risk because of our unique geology,” Sturgeon said. That’s because the continental plate beneath the country broke apart a billion years ago in what geologists call a “rift” and never healed.

So the Midwest shaking is a different strain than the California earthquakes, but they can be just as fierce when they happen. The terrain in this area is similar to Christchurch, New Zealand, according to Hilda Booth, who directs the earthquake program at the Arkansas Department of Emergency Management. A 6.3-magnitude earthquake killed 185 people, caused nearby rock walls to collapse and caused large amounts of earth to boil into the air in a phenomenon called liquefaction.

Geologists say the probability of a 7.5 to 8.0 magnitude shock along the New Madrid Fault over the next 50 years is relatively small at 7% to 10%, but the odds rise to 28% to 46% in the event of a 6.0 to 7.0 disturbance grades. during the same time frame.

In fact, it could be sooner. “We are late for a major earthquake that could cause a major disruption to our lives,” Booth notes.

Dying error?

But there is a contrary opinion. Some geologists believe that the New Madrid Fault may be “closed” and that what people are feeling now are merely “aftershocks” of the earthquakes that shook the Pothill in the 19th century.

Another theory is that the fault may have already migrated north, and that Illinois would experience the next spasm.

There’s no shortage of opinions on what’s going on deep underground, but the USGS is convinced that the New Madrid Fault is still alive and that the residents living above it – and who intend to survive for the next 50 years – should prepare for the possibility of a major earthquake. else.

buy earthquake insurance

There is earthquake damage insurance, but don’t look for it on a homeowner’s insurance policy. You will only get this type of coverage if you specifically request and pay for it as a separate policy or “passenger” to your existing ownership policy.

“Millions of people in 42 states are at risk of earthquake, yet relatively few buy it,” says Mark Friedlander, a spokesperson for the Insurance Information Institute, which represents property casualty insurers.

Midwesterners fixate their eyes on hurricanes but have the lowest rate of purchasing earthquake insurance in the country — 16%, according to the Insurance Information Institute. That’s slightly higher than it was a few years ago, but still lower than the western United States, where 28% of homeowners have earthquake insurance. Keep in mind that Californians are fortunate because they can purchase coverage from the California Earthquake Authority, as well as from private insurance companies.

In comparison, homeowners in other parts of the country also purchase earthquake insurance more frequently than Midwest residents:

Northeast: 21% South: 25%

Like most insurance companies, earthquake insurance has a discount. The withholding amount is the amount deducted from the insurance claim check.

Earthquake insurance deductibles are usually 10% to 20% of the home’s coverage limit. Assuming a 10% discount, this means that the $300,000 home would have to have more than $30,000 in compensation before it would be paid to the owner.

Earthquake insurance for a solid brick house will cost more than a wooden one because the wooden frame will withstand ground pressure better. Insurance companies also rate areas on a scale of 1 to 5 in terms of earthquake probability, so “a frame home in the Pacific Northwest may cost as much as $3 per $1,000 of coverage while the same home in New England costs just 50 cents per $1,000,” says Friedlander of the Insurance Information Institute.

Many earthquake policies do not cover “masonry veneer,” which is the brick or stonework that surrounds your home. If this is the case with your home, the value of the veneer is usually deducted from the total cost of your claim before the discount is applied, according to the National Association of Insurance Commissioners. This means that the cost of repairing the house will depend on the use of siding materials, which cost less than brick or stone. To avoid getting less money than you need to rebuild with brick or stone, be sure to ask your insurance company if the masonry veneer is covered.

Older home insurance may cost more because building codes, especially in states like California, are becoming more stringent.

Earthquake insurance can be prohibitively expensive for many. In New Madrid County, Missouri, for example, the poverty rate is over 22%. “We’re working with the Federal Emergency Management Agency (FEMA) to make it accessible to everyone,” says Jeff Briggs of the Missouri Emergency Management Agency.

Farther south along the river in eastern Arkansas, homeowners fear floods more than earthquakes, but many residents can’t even afford flood insurance policies, Booth says. Home insurance doesn’t cover floods either.

cover your head

The right insurance may provide financial support for those affected, but what do you do when the earthquake is above and below you? The Arkansas Earthquake Program Director Booth has some practical suggestions:

Don’t run outside if you feel the ground is shaking. There is a strong possibility that you will be hit by falling debris. Keep anything away from the doors that could block your exit. Find a safe place inside your home. Get down on your hands and knees, crawl under a desk or table and grab one leg for support. If you have to be outdoors, cover your face and neck. Stay away from large furniture, such as a desk or mirror, that could fall on you. Prepare an emergency kit in advance with supplies that can be used in the event that roads are closed and you are missing from stores.

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