May 02, 2022

Earthquake insurance coverage in the highest risk areas of Missouri drops to a historic low of 11.4 percent

A new report from the Missouri Department of Commerce and Insurance shows coverage has dropped nearly 50 percent since 2000

The Missouri Department of Commerce and Insurance (DCI) has issued a new Earthquake Insurance Market Report that shows earthquake coverage in the highest risk areas of the New Madrid fault region of the state has hit historic lows. In the six-county New Madrid region of the state, the percentage of residences with earthquake coverage has declined by an astonishing 49 percentage points between 2000 and 2021, from 60.2 to 11.4 percent.

The cost of earthquake insurance has risen by 816 percent since 2000 in the region. And while the price and lack of availability of insurance are likely major factors for the drop in coverage, another potential reason is that some consumers believe they already have coverage.

Recent consumer research conducted by the Missouri Department of Commerce and Insurance, the Center for Insurance Policy and Research at the National Association of Insurance Commissioners (NAIC), and the University of Missouri’s Disaster and Community Crisis Center has shown that many homeowners in the highest risk areas of the New Madrid Seismic Zone don’t realize their current standard homeowners insurance policies don’t cover damage caused by earthquakes.

“The southeastern quadrant of Missouri that includes the New Madrid Seismic Zone experiences around 200 small earthquakes each year,” said Chlora Lindley-Myers, director of the Missouri Department of Commerce and Insurance. “Yet, many of the most at-risk consumers living in that area don’t seem to know their homeowners or renters insurance policies don’t cover earthquake damage.”

The DCI runs an earthquake insurance education and awareness campaign each year to provide information and knowledge to those in the region who need to make decisions about coverage and plan to prepare and recover should a significant earthquake event occur. 

“Despite our efforts, the coverage rate for earthquakes in the most at-risk areas of Missouri has fallen to a record low, and the gap between the insured and the uninsured continues to grow,” said Lindley-Myers. “To battle this problem, we’re taking the additional step of bringing key people together to work on a solution.”

The DCI is hosting the first Central U.S. Earthquake Insurance Summit in St. Louis, MO, on May 23-25. For the first time, this Summit will bring together the insurance industry, regulators, government officials, and emergency management professionals to forge new ideas to begin “closing the gap.” Leading innovators and visionaries will start conversations to solve this critical issue for consumers living near the New Madrid Seismic Zone.