On the 200th anniversary of the great New Madrid earthquake, Missouri’s insurance director says most homeowners would not be adequately protected from an earthquake today.
John M. Huff, director of the Missouri Department of Insurance, says the number of consumers with earthquake coverage on their homes has decreased sharply over the past 10 years. At the same time, the cost of earthquake insurance has increased drastically, doubling in several counties.
Most homeowners insurance policies don’t cover earthquake damage – instead, consumers need to buy an endorsement, sometimes called a rider, on their homeowners policy. Huff says data submitted to his department shows that in areas at highest earthquake risk, fewer consumers’ homes are covered by those endorsements.
Figures show in Texas County show the percentage of residences covered in 2009 totaled about 13 percent. That’s down 7 percent from 2002.
For a home valued between $110,000 to $140,000, the average cost of earthquake insurance stood at $43. That’s down 5 percent from 2002 to 2009.
A year ago, Huff expressed concerns that even consumers with earthquake coverage were not adequately protected because of large deductibles that could leave homeowners paying $50,000 or more out of pocket, depending on the value of the home. Traditionally, the shortcomings in coverage have been limited to southeast Missouri, but now are starting to spread to St. Louis.
Officials said earthquake policies have a 10 to 15 percent deductible on the price of the home and contents. On a $100,000 that means as much as $30,000 could be out of pocket before the insurance benefits kick in.
“The products offered by insurance companies are not meeting the needs of Missouri homeowners when it comes to earthquake protection, and it’s now affecting our largest metropolitan area,” said Huff. “Earthquake preparedness will be a major topic in our state in the coming months, and the scarcity of solid insurance products needs to be included in that discussion.”
February was Earthquake Awareness Month, and the State Emergency Management Agency offers earthquake preparedness resources on its website, as well as a schedule of planning activities over the next few months.
The Missouri Department of Insurance website offers a list of the major homeowners insurance companies in Missouri that offer earthquake coverage.
Consumers and questions complaints about insurance can call the Insurance Consumer Hotline at 800-726-7390 or visit insurance.mo.gov.
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