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Earthquake Insurance And The New Madrid Fault Line

August 30, 2011

Earthquakes in Virgina and hurricanes in New York? Yes, the last week has brought about some bizzare twists of nature indeed. These events are certainly not unprecedented however, just infrequent.  This has brought up specualtion again of a potential threat of earthquakes along the New Madrid fault and the potential impact we could see in the Midwest.

New Madrid Fault ZoneWe think of earthquakes being a California problem but the New Madrid fault zone is actually six times bigger than the San Andreas fault zone in California and it covers portions of Illinois, Indiana, Missouri, Arkansas, Kentucky, Tennessee and Mississippi. In fact, this is the bicentennial for the largest earthquakes in the history of our country, which were caused by the New Madrid fault in the winter of 1811 and 1812.

Scientists at the US Geological Society have predicted that the chances of an earthquake along this fault line with a 6.0 magnitude or better are 25-40% sometime in the next 50 years.  The chances that could generate another earthquake in the 7.0-8.0 range during the same time period are 7-10%.

Earthquake Struck HouseAs an insurance agent, if I lived closer to the fault, you can better believe I would be hounding my customers to add earthquake coverage.  After all, the chances of a house fire are much smaller than that but we all want to make sure we have coverage for fire, just in case, right?  For those of you close to a fault line, I encourage you to visit with an insurance professional about earthquake insurance. For those of us not in direct line with the fault, it still begs the question: “What are the odds that my home could sustain damage and is it worth adding earthquake insurance?”

Here’s the deal.  We could very likely see a major quake in our lifetime in the Midwest.  There is a good chance we could feel the affects from this in Kansas City, Wichita, Des Moines and beyond.  Will it cause major damage this far out? Probably not but no one can accurately predict.  If you live in the outskirts of a major fault line like New Madrid, the cost of adding earthquake coverage can be very minimal and definitely worth considering.  The price on an average home is typically between $50-$100 per year.  Obviously, if you live closer to a major fault, the prices will be much higher.

We can’t predict everything that can happen but we can take steps to minimize our risk of severe loss for those things that have the highest potential to affect us. That is where insurance plays a very important part in your financial planning.  Talk to your insurance professional to make sure your risks are adequately addressed by your insurance program.

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