Insurers reaped $135 million selling quake policies, paid out $4.5 million

“I think that somehow, someway there has to be some clarity and make sure the rules are not set up so that I buy earthquake insurance and I find out, oh, you’re not covered," one lawmaker said.

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Oklahoma residents have paid more than $135 million in premiums since 2010 for earthquake coverage while insurance companies have paid about two out of every 10 claims for damage, a total of $4.5 million, an analysis by The Frontier shows.

The data show that of about 1,100 earthquake insurance claims filed with companies, just 202 residential claims are listed as paid during the past six years. The median payout during that time was about $5,500, with about 73 claims paid over $10,000.

Most residential claims  about 7 in 10  were either listed as denied, below the policy’s deductible or “closed without payment.”

As part of an investigation with our media partner, The NewsOn6, The Frontier analyzed data from the Oklahoma Insurance Department on earthquake insurance claims and policies sold since 2010.

Among the key findings:

  • Insurers have sold more than 250,000 earthquake policies between 2010 and 2016 to date.
  • Homeowners filed 1,136 claims during that time and holders of commercial policies filed about 45 claims.
  • Of the 1,136 residential claims filed, 202 received some amount of payment, just under 18 percent.
  • Of the remaining claims, 71 were below deductible, 33 were open cases under investigation and the remainder were either denied or listed as closed. (OID said some closed cases may have received payment but insurers didn’t specify that.)
  • The average amount residential policy holders received for claims paid was $5,500.
  • The highest claim paid was $1.2 million for a loss on Feb. 8, 2015. The data shows the claim was in an Oklahoma City zip code, 73103, that includes the wealthy Heritage Hills neighborhood but no other details are available.
  • A zip code including Prague, where a 5.7 magnitude earthquake struck in 2011, was the second-highest in total claims. Officials have reported more than 100 homes damaged in several counties surrounding that quake.
  • Commercial policy holders have filed less than 50 claims and just two have received payment, totaling about $75,000.

A state lawmaker and some homeowners in the area of Saturday’s record-setting 5.8 magnitude earthquake say they are concerned that consumers aren’t getting their money’s worth.

State Rep. Dennis Casey, R-Morrison, lives on a ranch north in Pawnee County near the epicenter of the earthquake. He said many of his friends and neighbors have significant damage to their homes from Saturday’s earthquake and previous quakes.

“When I see the damage to the homes, it just makes you sick. In my area, if you’ve got brick and mortar, you’ve got damage,” said Casey.

Casey said he appreciated Oklahoma Insurance Commissioner John Doak and his staff visiting with homeowners in Pawnee on Thursday but added: “I’m not sure I know exactly what the objective is.”

He said he believes many residents who buy earthquake insurance are at a disadvantage when they need help the most.

“I think that somehow, someway there has to be some clarity and make sure the rules are not set up so that I buy earthquake insurance and I find out, oh, you’re not covered.”

Doak said he understands that homeowners are often confused about earthquake insurance because it differs significantly from other types of insurance. He said his office has required brokers to complete continuing education credits about earthquake insurance and has required companies to explain their earthquake policies to consumers.

Doak noted that earthquake insurance policies have much higher deductibles than other types of insurance: typically 5 to 10 percent of your home’s value. On a $100,000 home, that means homeowners would be shelling out up to $10,000 before insurance kicks in.

Also, some common types of damage aren’t covered, such as damage to a home’s brick facade.

Doak said earthquake insurance should be viewed as catastrophic coverage.

“It’s not for maintenance; it’s not for windows. … If your home goes to the ground, that’s the type of coverage we’re talking about.”

But so far at least, that’s not the kind of damage Oklahomans are seeing on their property from the thousands of earthquakes shaking much of the state each year.

Numerous scientific studies, as well as federal and now state officials, have connected Oklahoma’s increasing number of earthquakes to underground injection of oilfield wastewater.

State and federal regulators have ordered 54 injection wells closed within 10 miles of the Pawnee earthquake.

Click here for several interactive graphics showing the data obtained and analyzed by The Frontier.

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Ziva Branstetter

Editor in Chief / Staff Writer

Ziva maintains she was always too nosy to be anything other than a reporter. Though she's on a new adventure with The Frontier, she spent more than 25 years in the newspaper business, making politicians nervous and making sure readers got the truth. Contact: ziva@readfrontier.com or 918-520-0406.
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