Jefferson City, Missouri (November 7, 2022) – On Monday, the Missouri Department of Commerce (DCI), the National Association of Insurance Commissioners’ (NAIC) Center for Insurance Policy Research (CIPR), and the University of Missouri’s Center for Disaster and Regional Crisis announced the release of a new report Addresses seismic protection gaps in the New Madrid seismic zone and provides insights into homeowner and renter insurance coverage.
Located in the central United States, the New Madrid Seismic Zone (NMSZ) is one of the most active seismic zones in the country, with an average of more than 200 small earthquakes per year. In 1811 and 1812, the region experienced the largest earthquakes in U.S. history, estimated at magnitudes of 7.0 to 7.5. Several studies project the cost of an earthquake of similar magnitude in the NMSZ region today, with total insured losses estimated to range from $110 billion to $290 billion.
More than 4,000 total earthquakes have been recorded in the NMSZ since 1974, and scientific experts estimate there is a 25-40% chance of another major earthquake occurring within the next 50 years.
Despite the threat, there is a substantial and growing gap in earthquake insurance coverage in the region. The Missouri DCI produces an annual estimate of home insurance coverage in the state. According to the latest data for 2021, earthquake coverage in the New Madrid, Missouri area has decreased by 49% (60%) since 2000, and earthquake compensation costs have increased by 816%. Across the region, an estimated 7-16% of homeowners report having earthquake insurance.
The study explores reasons other than cost and availability that may influence consumers’ decision to purchase earthquake insurance. The study found that the top three predictors of earthquake insurance coverage are:
- Use an agent to help you make insurance decisions
- Talk about earthquakes with friends and family
- Confidence in having sufficient information about earthquakes
Another important finding was that many homeowners were unaware that standard insurance policies did not cover earthquake damage and losses. The Missouri DCI incorporates the findings of this survey into its annual education and awareness campaigns to provide consumers with more information to make important decisions about coverage and preparedness.