State lawmaker pushing for more transparency from insurance companies on earthquake coverage

SUMMERVILLE, S.C. (WCBD) -- A recent earthquake in Summerville is putting renewed focus on one state lawmaker's push to require greater transparency from insurance companies when it comes to coverage options.

A 2.2 magnitude earthquake struck just southwest of Summerville just before 10 a.m. Wednesday, according to a report from the U.S. Geological Survey.

Small tremors are not an uncommon occurrence in South Carolina -- an estimated 10 to 15 earthquakes happen each year -- and about 70% of them are clustered in three areas: Ravenel-Adams Run-Hollywood, Middleton-Place-Summerville, and Bowman.

But predicting the exact time and place of an earthquake or aftershock is challenging, and seismologists widely agree that anywhere one has happened before, it can happen again.

Most, however, are not felt or noticed by people. Still, experts note that even small shifts in the ground can put stress on a home's foundation, potentially leading to damage over time.

While coverage for earthquake-related damage is not included in most standard homeowners and rental insurance policies, adding it to a policy is relatively simple: just ask.

"Consumers can purchase earthquake coverage as an endorsement to their existing homeowners' policies or as a stand-alone policy," said Michael Wise, the Director of the South Carolina Department of Insurance. "Since earthquakes can cause extensive structural damage, having this coverage ensures that you're not left facing major expenses alone."

The problem, according to one lawmaker, is that most people don't know it is available at all.

"I'm glad nobody was hurt, but it's a good reminder that, you know, we aren't often thinking about earthquake insurance," State Rep. Gil Gatch (R-Summerville) told News 2 after Wednesday's quake. "We just need people to know that it's offered."

Gatch introduced a bill in the South Carolina House in February 2021 that would require all insurance agencies operating in the state to inform homeowners about the risk of earthquakes and allow them to opt in or out of coverage.

The model would be similar to what already exists for underinsured motorist coverage, he said. That type of coverage is optional in the state, but insurance providers still have to verify that it has been offered to a customer.

"I'm not demanding that insurance companies offer products that they don't offer, but I think that if they offer it, they need to let their people know that we sit on the fault and this is an option that they have to purchase," Gatch said. "If they don't [want extra coverage], they can just sign a waiver that they don't."

Gatch's bill, reintroduced each session, has yet to get a subcommittee hearing as other issues have taken precedence, but he said he is hopeful for one at the beginning of next year's legislative session.

A representative for the nonprofit South Carolina Insurance Association wrote in a statement to News 2 that while the pending legislation is "well-intended," it could create complications in the industry.

"The requirement of collecting and retaining signed declinations for every policy in force would create an unnecessary burden for the insured and the insurer," the statement read, in part.

In the meantime, the Department of Insurance (DOI) encourages South Carolinians to consider getting extra coverage to protect themselves from "potentially devastating" impacts.

Though no major earthquakes have hit the state recently, a 2001 study commissioned by the then-South Carolina Emergency Preparedness Division found that many contemporary structures are vulnerable to earthquake activity.

Gatch said that not properly educating people about the risk and their options could deprive them of what may be important coverage.

A separate study determined that an earthquake of similar intensity and location to the 7.0 magnitude one that struck the Charleston area in 1886 would cause more than $20 billion in damage and injure or kill thousands of people.

"The citizens are going to be better served if they at least know that it's available," he said. "It's only after a tragedy or catastrophic event that we say, 'Well, I wish I would have known.' This is an opportunity to make sure that people who are purchasing insurance on their homes and businesses know."

Anyone interested in learning more about earthquake coverage or who needs assistance purchasing it can contact DOI's Office of Consumer Services at 803-737-6180 to be connected with an insurance agent in their area.