Insurance a problem in New Madrid Seismic Zone

MDCI: 'Get ready and have a plan'

Jefferson City – February is Earthquake Awareness Month, and the Missouri Department of Commerce and Insurance (DCI) continues its work on educating Missourians about earthquake risk and their insurance coverage options in preparation for recovery following a large-scale New Madrid Seismic Zone (NMSZ) earthquake.

"The threat of a major earthquake in Missouri, coupled with the lack of earthquake insurance coverage, is a complex problem," said Chlora Lindley-Myers, director of the Missouri Department of Commerce and Insurance. "As a department, we will continue to educate Missourians and help them understand the risks faced and their insurance coverage options. We will continue to partner with the insurance industry, local and state government, emergency management, and our surrounding states to look for solutions to this earthquake insurance gap. Working together is critical."

The DCI issued an Earthquake Survey in December 2023. It's one of two data components of an overall Earthquake Insurance Market Report the department annually produces that provides insight into the status of earthquake insurance coverage in Missouri. While the lack of understanding about risk and insurance coverage is part of the problem, the cost and lack of available earthquake insurance coverage in high-risk areas of the state continues to be the primary issue.

The 2023 survey references five Missouri locations for insurance companies to provide information about their average premiums: St. Louis, Springfield, Columbia, Kansas City, and Caruthersville — which is located in the NMSZ. Survey data showed that homes in the high earthquake risk area of the NMSZ in the southeastern part of Missouri have significantly higher costs and a reduced number of insurance options than the rest of the state:

For a $200,000 ranch style, 2,500 square foot home with a composite shingle roof, the average premium for Caruthersville is substantially greater than the rest of the state, with an average premium of $2,134 vs. St. Louis at $398 and Kansas City at $206.

In 2024, the average premium for a $200,000 ranch-style, 2,500-square-foot home with a composite shingle roof in Caruthersville increased nearly 7% compared to 2023. There were fewer options for its residents as companies offering insurance for new customers decreased by nearly 20% since 2022.

The number of companies writing coverage for masonry homes remains low, with only 45% of carriers covering it. Average premiums ($200,000 ranch style, 2,500 square foot home with a composite shingle roof) for masonry and masonry veneer homes are nearly 45% higher in Caruthersville than frame-only homes.

The NMSZ in southeast Missouri generated some of the most powerful earthquakes ever to jolt the nation. A series of major quakes occurred in 1811-1812, destroying buildings, ringing church bells hundreds of miles away, and briefly causing the Mississippi River to run backward.

The area is still active today, with an average of more than 200 earthquakes yearly, though most are too small to be felt. No one can predict exactly when an earthquake will occur, but scientists agree that large earthquakes in this zone still pose a risk. Experts estimate there is a 25-40% chance of a large earthquake occurring in the next 50 years.

It is important to note that a standard homeowner or renter's policy typically does NOT cover earthquake damage. The consumer MUST add an endorsement or purchase a separate policy for coverage. For any insurance questions, Missouri consumers are encouraged to call DCI's Insurance Consumer Hotline at 800-726-7390 or visit insurance.mo.gov/consumers/.

DCI is charged with protecting Missouri consumers through oversight of the insurance industry, banks, credit unions, utilities, and various professional licensees operating in the state. For more information about the department, visit its website at dci.mo.gov.