Quake insurance becomes popular

Agents called after nearby temblors

Sunday, November 13, 2011

Several earthquakes have rattled Northwest Arkansas since Nov. 5, prompting home owners to buy something unusual for an area considered seismically inactive: earthquake insurance.

“The phone has not stopped,” said Tommy Reddick, a State Farm Insurance agent in Fayetteville. “It is ringing continuously.”

Reddick said about 50 of his policy holders added earthquake coverage in the two days after a 4.

7-magnitude aftershock jolted Sparks, Okla., on Monday. Reddick was among those who felt the quake 190 miles away in Northwest Arkansas.

Reddick said he and his wife, Molly, were watching a professional football game on television when the quake hit at 8:47 p.m. Monday.

“The love seat went sideways twice,” he said. “It did a little shimmy.”

A state-record 5.6-magnitude earthquake shook the same area of Oklahoma - and much of Arkansas- two days earlier, at 10:53 p.m. Nov. 5, according to the U.S. Geological Survey. It was felt as far away as Wisconsin, according to some reports.

“The first one just got their attention,” said Reddick. “After the second one, they started to call.”

Larry Bittle, also a State Farm agent in Fayetteville, said he has added about 100 earthquake riders to polices in the week or so after the first earthquake.

“We are getting a lot of phone calls, and a lot of people are adding the coverage,” he said. “Several every day.”

Bittle said 100 people would amount to 1 percent to 2 percent of his homeowner policy holders. Many of his customers already had earthquake coverage because of the New Madrid fault in east Arkansas or because they moved from California, where earthquakes are common, he said.

The recent Oklahoma temblors got people in Northwest Arkansas talking about earthquake coverage, said Jan Phillips, a State Farm Insurance agent in Springdale. About 5 percent of the home owners who have policies through her agency have added earthquake coverage since they felt the undulations from Oklahoma, she said.

The phone has been ringing regularly at Sims & Renner Insurance in Fayetteville, Kevin Renner said, but he has added only a few earthquake riders to existing policies. One reason is that many underwriters his company uses put a moratorium on new earthquake coverage for a specified time after seismic activity, normally seven to 30 days, he said.Some of those underwriters aren’t allowing new policies for earthquake coverage yet for Arkansas home owners.

Oklahoma has had 27 earthquakes that registered at least a magnitude of 3.0 since Nov. 5, according to the Center for Earthquake Research and Information in Memphis. The state had an unexplained uptick in the number of earthquakes last year. From 1972 through 2007, Oklahoma had two to six felt earthquakes per year (magnitude 2.0 or stronger), said Austin Holland, a seismologist with the Oklahoma Geological Survey. The number increased to more than a dozen in 2008, to more than 50 in 2009 and to more than 100 in 2010, he said.

The number for this year hasn’t been determined.

“This just goes to show an earthquake can strike at any time in any place,” said Scott Ausbrooks, geohazards supervisor for the Arkansas Geological Survey.

Oklahoma’s 5.6-magnitude temblor Nov. 5 knocked pictures off the wall at the headquarters of Arkansas State Police Troop H in Fort Smith, which is 160 miles from the earthquake’s epicenter, Ausbrooks said.

“That’s pretty amazing that far away,” he said. “It’s all in the size and duration of the earthquake.”

Phillips, who lives in Cave Springs in Benton County, said she felt the Nov. 5 quake.

“It lasted about 20 seconds,” she said. “It was a little unnerving.”

Historically, many east Arkansas residents have carried earthquake insurance because of the New Madrid fault, which produced three of the largest U.S. quakes on record, ranging from magnitude 7.5 to 7.7. Those quakes occurred in 1811 and 1812.

Some 200 “moderate to large” aftershocks followed until March 15, 1812, according to the U.S. Geological Survey. The first of two 7.7-magnitude quakes in the series occurred in northeast Arkansas.

At the time, New Madrid, Mo., was the largest settlement on the Mississippi River between St. Louis and Natchez, Miss.

A 5.0-magnitude quake occurred along the New Madrid fault near Marked Tree in 1976, Ausbrooks said.

Homeowner insurance policies don’t cover earthquake damage unless the policy owner has purchased a specific rider for earthquake coverage, said Gary Stephenson, a spokesman for State Farm in Arkansas.

About 80 percent of east Arkansas home owners have earthquake coverage, said Stephenson. In central Arkansas, it’s about 62 percent.

In western Arkansas, about 28 percent of home owners have earthquake coverage, Stephenson said. Those percentages are from March, the most recent data available.

Residents of central Arkansas have upped their earthquake coverage since quakes in Faulkner County became more frequent in 2010. Faulkner County has had about 1,300 earthquakes of 1.0 magnitude or greater over the past year, Ausbrooks said. That doesn’t count 10,000 smaller “microquakes” during the same time period, he said.

The largest quake in Arkansas over the past year was a 4.7-magnitude temblor Feb. 27 near Greenbrier in Faulkner County. It was alsothe largest earthquake in the state in more than 30 years.

Benton County had its only felt earthquakes in recorded history in 2010. A 2.5-magnitude quake April 29 was followed by a 2.7 magnitude quake May 20. Residents described the second earthquake as a sonic boom that shook houses and knocked books from shelves. Normally, a 2.5-magnitude quake would be the threshold for being felt above ground in Arkansas, Ausbrooks said.

Northwest Arkansas is still considered seismically inactive, despite those recorded quakes, Ausbrooks said.

“It would take a lot more than two small earthquakes over a certain period of time to be considered as a seismically active area,” he said.

An earthquake in Arkansas or Oklahoma generally is felt farther away than the same magnitude earthquake in California, he said.

“Our rocks here are older, colder, more dense and continuous,” he said. “The same rock continues over a larger area. That makes them very efficient at transmitting seismic energy without it breaking down.”

Underground plates in the west are younger, warmer and not continuous, Ausbrooks said.

“So the energy dissipates much more rapidly,” he said.

Earthquake insurance coverage is different from other coverage because it’s a bet against catastrophic damage as opposed to minor damage. Premiums are low, but deductibles are high. Earthquake coverage will help with things such as cracked foundations, but not so much with cracks in gypsum wallboards, for example.

“I would consider it to be more of a catastrophic type coverage,” Bittle said.

Stephenson agreed.

“If a damaging quake occurs, you would likely have a total loss,” he said. “You’re looking at a severe situation if there’s a damaging quake.”

Stephenson said State Farm earthquake deductibles are either 5 percent or 10 percent of the value of the home being insured. So, for a $250,000 brick veneer home, the lowest deductible might be $12,500.

Insurance on that home would be $70 to $80 per year in western Arkansas and twice that in east Arkansas, Stephenson said. It would cost extra to insure the contents of the home, he said.

Ausbrooks, who lives in Greenbrier, said he has earthquake insurance on his home.

Northwest Arkansas, Pages 17 on 11/13/2011