Jeffrey Wade
Earthquakes in Missouri may not be common, but the risk is very real. The state sits on the New Madrid Seismic Zone, the most active earthquake region east of the Rocky Mountains. While standard homeowners' insurance policies typically exclude earthquake damage, Missouri earthquake insurance provides financial protection to cover the cost of repairs, personal property replacement, and any necessary temporary relocation expenses. Given the potential for damage and the likelihood of earthquakes in the region, is earthquake insurance worth it in Missouri?
| Characteristics | Values |
|---|---|
| Necessity of earthquake insurance in Missouri | Earthquake insurance is not mandatory but is a necessity for homeowners and property owners in Missouri as the state sits on the New Madrid Seismic Zone, one of the most active earthquake regions in the country. |
| Risk of earthquakes in Missouri | Earthquakes are not common in Missouri, but the risk is very real. Missouri has a history of powerful earthquakes, and scientists predict that the state is due for another significant quake in the future. |
| Coverage of earthquake insurance | Earthquake insurance covers damage to homes and personal belongings caused by an earthquake, including repairs, replacement of items, and temporary relocation expenses. |
| Cost of earthquake insurance | Earthquake insurance typically has a high deductible, ranging from 5% to 25% of the coverage amount. The average cost of retrofitting a home for earthquake safety is between $3,000 and $7,000. |
| Factors to consider when purchasing earthquake insurance | When shopping for earthquake insurance in Missouri, it is important to compare policies and rates from multiple providers and consider factors such as deductibles, coverage limits, and exclusions. |
| Misconceptions about earthquake insurance | There is a common misconception that homeowner policies cover earthquakes, but standard homeowners' insurance policies typically exclude earthquake damage. |
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What You'll Learn
Missouri's earthquake risk
Although earthquakes are not common in Missouri, the risk is very real. The state sits on the New Madrid Seismic Zone, the most active zone east of the Rocky Mountains. Between 1974 and 2003, there were over 21,000 earthquakes of magnitude 3.5 or greater in the US.
In the 1800s, Missouri was shaken by several quakes that devastated the area. The New Madrid Seismic Zone has a history of producing powerful earthquakes, and scientists predict that a significant quake will occur in the future. The southern midwestern states of Missouri, Oklahoma, and Arkansas have all experienced several earthquakes recently, and they seem to be becoming more common.
The Missouri Department of Commerce and Insurance states that brick homes, wood frame houses with crawl spaces, and homes with multiple stories are at greater risk of earthquake damage. Missouri earthquake insurance provides financial protection for repairs to your home, replacement of personal property, and temporary relocation expenses. Standard homeowners' insurance policies typically exclude earthquake damage, so it is essential for Missouri residents to consider additional coverage.
The cost of retrofitting a home for earthquake safety is between $3,000 and $7,000. This includes bolting the house to its foundation, attaching the water heater to a wall, adding automatic gas shut-off valves, bolstering the walls around crawl spaces, and reinforcing chimneys and masonry walls.
In summary, Missouri's earthquake risk is significant due to its location on the New Madrid Seismic Zone. The state has a history of powerful earthquakes and is predicted to experience more in the future. Missouri earthquake insurance provides crucial financial protection for residents, and retrofitting can help reduce the risk of damage.
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Pros and cons of earthquake insurance
Earthquake insurance is not mandatory, and it can be expensive with high deductibles. However, it is worth considering the pros and cons of earthquake insurance, especially if you live in an area that is at high risk, like Missouri, which is near the New Madrid Fault Line.
Pros
- Earthquake insurance covers the cost to rebuild your home and replace your belongings if they are destroyed by an earthquake.
- It covers the cost of hotel stays, restaurant meals, pet boarding, and other living expenses if you need to live elsewhere while your home is being rebuilt.
- It could save you from a massive financial hit if your house is destroyed in an earthquake.
- It is a good idea if you would struggle to pay for expensive repairs after an earthquake.
Cons
- Earthquake insurance is costly, with high premiums, especially in high-risk zones near fault lines.
- It is an additional cost on top of your standard home insurance policy.
- It often has high deductibles, which is the amount subtracted from your claim payment.
- There are typically a lot of exclusions and limits on earthquake coverage.
- Some people assume federal assistance will be available if their home is damaged by an earthquake, but individual grants from the Federal Emergency Management Administration may fall short of what is needed to recover financially.
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What earthquake insurance covers
Earthquake insurance is an important purchase if you live in an area that's at high risk of earthquakes. While earthquakes can happen in all 50 states, some places are more prone to them, and earthquake insurance becomes a more crucial consideration in those cases.
If you're a homeowner, your earthquake insurance will usually have the same limits on dwelling coverage as your standard home insurance. This reflects the estimated cost to rebuild your home, not its market value. If you're a renter, you don't need to worry about adding dwelling coverage, but you may need to raise your personal property coverage limit to protect your belongings.
Earthquake insurance covers damage caused by an earthquake, reimbursing you for the value of the items lost and the cost of repairs to your home. It can also pay for living expenses if you need to live elsewhere while your home is being repaired. However, it's important to note that earthquake insurance typically does not cover damage to your land, vehicles, or water damage from outside your home, such as floods or tsunamis.
In Missouri, the New Madrid area has experienced fluctuating insurance rates due to the risk of earthquakes in the region. While the number of residents with earthquake insurance was at 60% in 2000, it declined to 11.4% in 2021, showcasing the challenge of rising premiums in high-risk areas.
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How to get earthquake insurance
Earthquake insurance is not included in standard homeowners, renters, or condo insurance policies. Therefore, if you live in an area that is at risk of earthquakes, you may want to consider purchasing earthquake insurance.
If you are a homeowner, your dwelling coverage limit for earthquake insurance will usually be the same as for your home insurance. This reflects the estimated cost to rebuild your home, not its market value. You can also purchase additional living expenses coverage, which will cover the cost of living elsewhere while your home is being repaired.
If you are a renter, you do not need to worry about dwelling coverage, but you can increase your personal property coverage limit. This will cover the cost of any damage to your belongings.
To get earthquake insurance in Missouri, you can either add it as an endorsement to your basic coverage or purchase a separate policy. According to the Missouri Department of Insurance, the New Madrid zone has a 7-10% chance of experiencing a major earthquake in the next 50 years. Therefore, if you live in this area, it may be worth considering earthquake insurance.
You may be able to reduce your earthquake insurance premium by choosing a higher deductible or retrofitting your home to reduce the risk of damage. Retrofitting includes measures such as bolting your house to its foundation, attaching the water heater to a wall, and reinforcing your chimney.
When shopping for earthquake insurance, be sure to compare quotes from multiple insurers to find the best policy for your needs.
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Cost of earthquake insurance
The cost of earthquake insurance in Missouri, particularly in the New Madrid area, has been described as unaffordable and expensive. In 2000, 60% of New Madrid residents had earthquake coverage, but that number has declined to 11.4% as of 2021.
The cost of earthquake insurance is based on where you live, among other factors. Nationally, earthquake coverage costs around $800 per year, but those numbers can climb in high-risk areas. In regions like San Francisco, with active fault lines, premiums range from $2,000 to $5,000 annually.
In Missouri, the New Madrid Fault Line contributes to the risk of earthquakes in the state, and insurance companies have raised prices to ensure they have enough reserves to remain solvent in the event of an earthquake. This has resulted in a higher proportion of high-risk clients, causing a feedback loop of increasing prices. Some companies have even left the market, deciding it is too risky to offer earthquake insurance.
The Missouri Department of Commerce and Insurance notes that certain types of houses are more likely to suffer earthquake damage, including brick homes, wood frame houses with crawl spaces, and multi-story homes. Retrofitting your home to reduce the risk of damage may help lower your insurance premium. This includes bolting your house to its foundation, attaching the water heater to a wall, adding automatic gas shut-off valves, reinforcing walls and chimneys, and other seismic upgrades.
Additionally, earthquake insurance policies typically have a high deductible, which is the amount subtracted from your claim payment. You may be able to reduce your premium by choosing a higher deductible. It is also worth considering your tolerance for risk and whether you would be able to afford expensive repairs if an earthquake occurred.
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Frequently asked questions
Earthquake insurance is worth considering in Missouri, especially if you live near a fault line and cannot afford expensive repairs after an earthquake. Standard homeowners' insurance policies typically exclude earthquake damage, so it is essential to consider additional coverage.
Missouri earthquake insurance covers damage to your home and personal belongings caused by an earthquake. It can include dwelling coverage, personal property coverage, and additional living expenses if your home is uninhabitable after an earthquake.
Earthquakes are not common in Missouri, but the risk is very real due to the presence of the New Madrid Seismic Zone, one of the most active earthquake regions in the country. There were over 21,000 earthquakes of magnitude 3.5 or greater in the US between 1974 and 2003.
The cost of earthquake insurance in Missouri can vary depending on various factors, such as deductibles, coverage limits, and exclusions. Earthquake insurance generally has a steep deductible, which is the amount subtracted from your claim payment. You may be able to reduce your premium by choosing a higher deductible or retrofitting your home to reduce the risk of damage.
