Earthquake Insurance Coverage in Oklahoma

Posted April 15, 2016

Recently, thousands of Oklahoma residents were rocked by a series of progressively more intense and destructive earthquakes. While many residents have earthquake coverage under their homeowners insurance policies and so are able to make necessary repairs and replacements, an increasing number of policyholders are being denied compensation. Insurance companies argue that because many of the earthquakes currently plaguing Oklahoma residents are caused by hydraulic fracturing, they are technically man-made and so not covered under the policies.

In response to concerns that insurance companies have been acting in bad faith by refusing to cover earthquake damage, Senator Clark Jolley introduced two new bills, which are currently being considered by the state legislature.

Hydraulic Fracturing

In the last decade, oil and gas drilling activities in north-central Oklahoma have increased substantially, as has the use of hydraulic fracturing. In order to pump out the gas and oil from the shale deposits common to that area, prospectors use hydraulic fracturing, which involves injecting large amounts of water, sand, and chemicals into the ground. This creates cracks in the rock formations that enable gases and oil to more easily be pumped to the surface.

While effective, evidence that these activities can and do cause earthquakes continues to mount. A report, recently published by the U.S. Geologic Survey, indicates that around seven million residents, a large portion of whom live in Oklahoma, now reside in areas that have become vulnerable to earthquakes, making obtaining proper earthquake insurance coverage extremely important.

Proposed Bills

If passed, Senate Bill 1498 would protect Oklahoma residents who have earthquake coverage through their homeowners insurance policies from being denied compensation because the earthquakes were man-made. However, in cases where oil drilling or injection wells are suspected of instigating the earthquake, insurers would be permitted to sue the responsible parties.

Anticipating that the increase in seismic activity in the state will lead many insurers to stop offering earthquake coverage entirely, Senator Jolley also introduced Senate Bill 1497, which gives the insurance commissioner the authority to create a state-administered earthquake reinsurance program.

Contact A Legal Representative

An insurance company’s decision to act in bad faith can have devastating financial consequences for policyholders and their families, especially in cases where natural disasters are the cause of the damage. If you have been the victim of your insurer’s bad faith, it is important to contact an experienced attorney who can protect your interests and help you obtain the compensation you deserve. Please contact one of our experienced bad faith insurance attorneys at the Bennett Law Firm at 405-272-0303.