August 09, 2016

Recent southeast Missouri earthquake reminds Missourians about earthquake insurance

Homeowners insurance does not cover damage caused by an earthquake

Jefferson City, Mo- Residents of East Prairie, Missouri may have woken up to trembles late last night after a 2.8 magnitude earthquake shook the area, according to reports from the U.S. Geological Survey. The tremors serve as a reminder that Missourians are susceptible to earthquakes and that homeowners insurance does not cover earthquake damage.

"Once again, Missourians are reminded that they are located in the New Madrid Seismic Zone, which is the most active seismic zone east of the Rocky Mountains," said Missouri Department of Insurance Director John M. Huff. "Having earthquake insurance is the best way to ensure families can recover after an earthquake but many Missourians are having trouble getting earthquake coverage."

Recent insurance data demonstrates that southeast Missouri is experiencing an insurance coverage crisis. Less than one in five homes in Missouri's New Madrid area, the area most susceptible to earthquakes in Missouri, had earthquake coverage in 2015. The department recently released a supplement to the 2015 Earthquake Report that indicates Missouri's earthquake insurance market continues to shrink while premiums continue to rise. 

The percentage of residents with earthquake coverage in the New Madrid area dropped another two percentage points between 2014 and 2015. More than 60 percent of homes in the New Madrid area had earthquake insurance coverage in 2000.  But by 2015, that number plummeted to less than 18 percent.

Additionally, the six-county New Madrid area has seen a 510 percent increase in premium costs since 2000. In 2000, a homeowner could expect to pay just $57 a year for earthquake insurance coverage but by 2015 that amount jumped to $348.

Traditional homeowners' insurance policies do not cover earthquake damage and many consumers are under the false belief that FEMA will help them recover should a major earthquake damage their home. Under FEMA's Individual Assistance program, the maximum grant award is $32,900, far less than what most homes are worth. 

To help Missourians find coverage, the department provides an online list of insurance companies that offer earthquake insurance. The department also debunks common earthquake insurance myths in a video aimed to educate Missourians about coverage.

Consumers with questions about earthquake coverage are encouraged to call the Insurance Consumer Hotline at 800-726-7390 and visit insurance.mo.gov/earthquake.

About the Missouri Department of Insurance, Financial Institutions & Professional Registration

The Missouri Department of Insurance, Financial Institutions and Professional Registration (DIFP) is responsible for consumer protection through the regulation of financial industries and professionals. The department's seven divisions work to enforce state regulations both efficiently and effectively while encouraging a competitive environment for industries and professions to ensure consumers have access to quality products.

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