With the continued rolling thunder of earthquakes in central Oklahoma, more people are buying earthquake coverage on their homeowners insurance.  Unfortunately, limiting clauses in the insurance policies make this relatively inexpensive coverage kind of useless unless we have a HUGE quake.

I was sitting here at my desk a year or two ago and a fair sized quake hit us.  There was a loud crack and the ground heaved.  I thought it might be a gas explosion, or an airplane crash at Will Rogers World Airport, which is nearby.  I think it was about 4.5 on the Richter; it was earth-shaking, but not earth-shattering.

One of my partners had some pretty significant damage to his homestead.  The concrete around his pool heaved about three inches, and would be very expensive to fix.  But … not expensive enough.  It turns out in his policy there is a limitation that the damage to the real estate must be at least 35% of the value of the home before the policy kicks in.  So, although it would be perhaps a $15-$20,000.00 repair, there is no coverage because that is less than 35% of the appraised value of the home.

Then we took a case in which the damage was well over 35% of the value of the home.  The series of quakes over a period of a year or so (you’d be surprised how many there have been) had caused part of her house to bulge out. The ceiling and rafters shifted, and it really looked like that part of the home was in danger of collapse.  Before she came to us our client had made a claim with her insurer.  The insurer sent an expert out who decided the home had shifted on its foundations due to settling of the soil, not the series of quakes.  This was bogus, as her area of Oklahoma County does not have clay soil that expands and contracts that way.

However, when I reviewed the policy, all of the damage claimed must have occurred within 72 hours (three days).  I presume this is to take into account the possibility of aftershocks, which do occur after large quakes.  Since our client had already made the claim based on ALL of the tremors over a long period of time, we could not do the case.  There would have been no coverage for repetitive tremors that caused damage over a period of a year or more rather than in the three day window permitted by the policy.

An insurance policy is a contract between you and your insurer.  The insurer writes the policy, and you do not get to alter it.  When a policy is ambiguous, the law interprets it against the party that drafted the policy and in favor of the other party, because they are “contracts of adhesion”, not true negotiated contracts.  Policies must be submitted to and conform to standards set by the Oklahoma Insurance Commission.  Policies are also regulated by state statutes, which sometimes give us some protection from the ways insurance companies write their policies.  However, in my opinion in both of these cases the policies were consistent with state law and essentially gave the homeowner no protection unless there was one really large quake, and perhaps some aftershocks … which I hope never occurs here.

I am not saying to refuse quake coverage.  But I had never had to examine or interpret earthquake coverage before and have been surprised by how limited it is.  On the other hand, it’s not very expensive in Oklahoma, so it may be wise to purchase that coverage (it’s called a “Rider”) just in case we have a catastrophic quake.

I lived in San Francisco for three years and only felt one earthquake.  Oddly, I think I’ve experienced more of them here, than I ever did in San Francisco.  The largest recorded quake in the history of the United States occurred along a fault line that runs north and south sort of parallel to the Mississippi River.  Fracking is doing wonders for American oil and gas production, but every action has its consequences, and the evidence is mounting that fracking and waste water injection wells may be causing these disruptions.  Whatever, the case, let’s hope they remain small.