OKLAHOMA – Saturday’s 5.6 earthquake in Pawnee has many Oklahomans talking about earthquake insurance again.
One local attorney said he’s seeing a big problem with the way insurance companies are writing earthquake coverage – one he said Oklahomans need to know about.
“’We don’t cover settlement’ is what insurance companies will say. ‘Settlement is and damage caused from settlement is excluded under terms and conditions of your policy,’” said Jeff Marr.
Marr is representing several clients with earthquake damage.
He said they’ve discovered many times insurance companies issue a policy without ever inspecting your home.
“That’s where they bring in their engineer and they’ll say ‘Oh, that’s settlement. The earthquake was just a coincidence, and consequently you’re not covered,’” Marr said.
“If you go to get an earthquake insurance policy and the insurance company doesn’t come out to inspect your property, that should send up a red flag for you,” said Buddy Combs with the Oklahoma Insurance Department.
Combs said the insurance commissioner addressed this in a memo to insurance companies last year, telling them “If an insurer intends to deny a claim, asserting ‘pre-existing’ damage, I expect that the insurer has inspected the property prior to inception of the coverage.”
But, Marr said that’s not happening.
He suggests homeowners do it themselves: take pictures and video of your house, so you can document what it looks like before and after an earthquake.
“When they say ‘Well, that’s caused by settlement,’ you say ‘No, it was caused by the earthquake,’” Marr said. “If you’re going to say that it’s pre-existing, then you better be able to back it up.”
From 2010 through May of this year, only 19 percent of earthquake insurance claims in Oklahoma were paid.
If you’re having trouble settling a claim, you can file a complaint with the insurance department.
We reached out to several of the larger insurance companies about this issue.
Farmers Insurance sent us this statement:
“When issuing a new homeowners insurance policy, whether a customer elects to add earthquake insurance coverage or not, we will typically inspect the home to assure it meets our underwriting guidelines.”
State Farm told us their procedures are proprietary when it comes to underwriting and inspecting properties and suggested we contact the Insurance Information Institute.