Earthquake Insurance Companies Act to Limit RiskPosted May 17, 2016
With the growing popularity of fracking in Oklahoma has come a corresponding increase in earthquakes. The number of earthquakes in the state has risen dramatically in the past few years and has brought with it a growing concern on the part of insurance companies who must pay out earthquake insurance claims.
A Reuters investigation found that nearly a dozen insurers have acted to limit their exposure in an earthquake scenario. An examination of 3,000 pages of documents from the Oklahoma Insurance Commission revealed that although insurers have insured more and more properties in recent years, they also sought to limit their liability if a major earthquake hits the state.
Six of the companies in the investigation increased their premiums by as much as 260 percent. Three companies increased deductibles while three others ceased writing new earthquake insurance policies. Several companies initiated more than one of these policies. The insurers’ actions have made it significantly more difficult for homeowners to buy earthquake insurance.
The number of earthquakes has been increasing in Oklahoma because of fracking. So far, the biggest has only been a 5.6, but experts fear that the increase in small quakes will lead to a bigger one soon. There were very few earthquakes of a 3.0 magnitude or greater in 2008, but there were 103 quakes in 2013, and 890 in 2015.
Because earthquakes were so rare in Oklahoma before fracking, many homeowners’ insurance policies did not cover earthquakes. Now, the value of coverage has drastically increased, from under $5 million in 2009 to $19 million in 2015.
Relatively few homeowners have filed claims on earthquake insurance thus far, partly because the damage resulting from the small quakes is generally minor enough not to exceed the deductible. Further, some insurance companies have denied claims, citing other factors such as ground erosion or settlement as a cause for the quakes.
Insurance companies do not want to have to make huge payments on policies if the fear that there is an upcoming major earthquake is realized. Companies may be too exposed even now. If insurance companies have to pay out claims based on manmade earthquakes, they can, in turn, sue the oil and gas companies for reimbursement for the cost of paying damages to homeowners.
An experienced Oklahoma bad faith insurance attorney can help you recover the compensation you deserve on your earthquake insurance policy. Please contact an attorney at the Bennett Law Firm, at 405-272-0303, to schedule an initial consultation.