(The Center Square) – Many residents of Eastern Missouri probably checked their earthquake insurance after a 2.8 magnitude quake on April 29.
Three days later, the Missouri Department of Commerce and Insurance (DCI) released a new earthquake insurance market report showing historic lows in insurance coverage in the highest risk areas in the state. Residences with earthquake coverage in the New Madrid region – Mississippi, New Madrid, Pemiscot, Dunklin, Stoddard and Scott Counties in Southeast Missouri – declined from 60.2% in 2000 to 11.4% in 2021. During that period, earthquake insurance premiums increased 816%.
While the price and lack of availability of insurance are likely factors for the drop in coverage, the DCI report stated another potential reason is some consumers believe they already have coverage. In the St. Louis area, near the epicenter of Friday’s tremor, between 34 and 53% of residences have earthquake coverage compared to between 8 and 16% in New Madrid.
DCI’s latest report found the annual average homeowner insurance premium for earthquake coverage is $285 in St. Louis and $589 in New Madrid.
Julie Dutton, a scientist with the United States Geological Survey’s National Earthquake Information Center, said it’s difficult to determine how much damage to homes and businesses could occur during various magnitudes of earthquakes.
“It’s such a difficult question to answer because you have so many variables,” Dutton said. “You have the depth of the earthquake and the type of ground motion along with the types of structures in the area. Some masonry falls apart before some other structures. There’s really not a quantifiable answer.”
Consumer research by DCI, the Center for Insurance Policy and Research at the National Association of Insurance Commissioners and the University of Missouri’s Disaster and Community Crisis Center found many homeowners in southeast Missouri don’t realize their current standard homeowner’s insurance policies don’t cover damage caused by earthquakes.
“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,” Chlora Lindley-Myers, DCI director, said in a statement announcing the report.
The DCI estimates economic losses of $300 billion if a significant earthquake happens in Missouri.