The Missouri Department of Commerce and Insurance (DCI) indicates fewer homes are insured against earthquakes in the New Madrid Seismic Zone. October’s Great ShakeOut Drill offers a good opportunity for consumers in the high-risk zone to prepare their families to recover following an earthquake. This plan should include financial preparations, including earthquake insurance.
“No one ever expects a disaster, or that it will happen to them, but we know they do happen. The spring tornado in St. Louis, and events before it, sadly reinforced the challenge of high uninsured rates in many of our communities, which dramatically complicates the path to recovery,” DCI Director Angela Nelson said. “When combined with the rising cost of rebuilding homes and the sheer scale of the damage, being uninsured can be devastating. We want to ensure all Missourians have a plan for their recovery. Insurance is a good way of mitigating risk and is a critical tool that enables the recovery process.”
In the seven counties most at risk along the New Madrid fault line, the number of homes with earthquake insurance has decreased. Since 2000, coverage has dropped by 50 percentage points from 60.2% to just 10.4% in 2023.
There is, however, a glimmer of good news. A recent survey of insurers found that coverage availability has slightly improved since last year. About 85% of the market now offers deductibles of less than 10% of the property’s value.
Many insurance companies have left high-risk areas or have made their rules stricter, forcing homeowners to pay much higher deductibles. In some cases, homeowners must cover 20% to 25% of the policy limit themselves before insurance will pay.
The cost of earthquake insurance has gradually increased over time. DCI attributes the increase in earthquake insurance premiums primarily to rising construction costs, which are the main factor in the cost of insuring structures. The premiums are also influenced by higher reinsurance costs (insurance for insurance companies,) which reflects both the increasing global frequency of natural disasters and the use of more sophisticated risk modeling for estimating earthquake losses.
About the New Madrid Seismic Zone: Geologists agree that the New Madrid Seismic Zone, which runs through the southeastern part of Missouri, poses a significant risk to the region. This area includes the Missouri Bootheel and extends north to the St. Louis metropolitan area.
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, please visit our website at dci.mo.gov.
