February 03, 2023

Residents in the New Madrid Seismic Zone remain largely uninsured for earthquake

Missouri Department of Commerce and Insurance urges Missourians to consider earthquake insurance

Jefferson City, Mo. – February is Earthquake Awareness Month, and the Missouri Department of Commerce and Insurance (DCI) continues to encourage Missourians to consider earthquake insurance as a part of their disaster planning and financial recovery plans.

Each year, DCI produces an Earthquake Insurance Market Report to track earthquake insurance coverage in at-risk areas of the New Madrid Seismic Zone. The amount of residences with earthquake coverage has declined dramatically since the department began tracking this information nearly 30 years ago. In a six-county section of the state in southeast Missouri, the number of homes with earthquake coverage fell by over 47 percent between 2000 and 2020, from 60.2 to 12.7 percent.

“We continue to be concerned about the lack of earthquake coverage in Missouri,” said Chlora Lindley-Myers, Director of DCI and 2023 President of the National Association of Insurance Commissioners (NAIC). “As a department, we will continue to work with the insurance industry, local and state government, emergency management, and with our surrounding states to build awareness, educate, and look for solutions to this earthquake insurance gap. We must be prepared before a major event happens in the New Madrid Seismic Zone.”

Although one of the likely culprits of the continuing decline is the sharply escalating cost of earthquake insurance in the region, recent research conducted by DCI, the NAIC, and the University of Missouri’s Disaster and Community Crisis Center found that many homeowners and renters in the region assume earthquake is covered under their traditional homeowners or renters policy. However, earthquake coverage must be purchased separately. In addition, many homeowners were unclear about the actual cost of earthquake coverage.

During the winter of 1811-1812, the New Madrid Seismic Zone experienced a series of powerful earthquakes, with experts estimating the primary quakes ranging in magnitude from 7.0 to 7.5.  Losses would be staggering if an earthquake of similar magnitude occurred today along the New Madrid fault. A joint assessment by the Mid-American Earthquake Center of the University of Illinois and the Federal Emergency Management Agency (FEMA) predicted that a major New Madrid event could entail total economic losses of up to $300 billion. This would surpass the highest total economic loss of any natural disaster in U.S. history.