Kansans’ cost for earthquake insurance is relatively low

The old post office in Milan suffered structural damage after a 4.8 earthquake hit nearby Wednesday afternoon.
The old post office in Milan suffered structural damage after a 4.8 earthquake hit nearby Wednesday afternoon. The Wichita Eagle

If the earthquake that rolled through south-central Kansas on Wednesday convinced you that you need earthquake insurance, you couldn’t be in a better place to buy it.

Because Kansas doesn’t have a history of earthquake losses, the price and deductibles are low compared to more quake-prone places like California. And at least some companies will sell it to you right now, although others might make you wait.

Thursday found Wichitans, mostly new to the idea of living in earthquake country, on the phone to their insurance agents inquiring about adding quake insurance to their existing homeowners’ policies.

“We have been getting calls all day,” said Matt Woodall, a sales producer for the Dave Kauffman Allstate insurance office in east Wichita. “I haven’t had too many people ask about earthquake insurance before.”

The ongoing risk is difficult to evaluate. But there’s no question that earthquakes have grown more frequent and stronger here.

With a 4.8 magnitude, Wednesday’s earthquake was the strongest to hit Kansas since 1977, when seismic monitoring began, according to U.S. Geological survey data.

Wednesday’s quake was the 131st in Kansas this year. The previous record was last year, 32 quakes, including one of 4.3 magnitude.

In the 35 years before that, the state averaged 5.5 quakes a year, none bigger than a 4 magnitude.

Seismologists are bringing in more equipment to study why southern Kansas and northern Oklahoma have been hit with a rash of earthquakes in the past couple of years after decades of seismic tranquility. Some evidence points to oil and gas production activities.

A task force appointed by Gov. Sam Brownback issued an inconclusive report in late September, postulating that underground injection of oil and gas waste fluids might have something to do with the earthquakes. The report emphasized that the panel had found no evidence the quakes were caused by fracking – using high-pressure fluids to fracture underground rock and free trapped oil and gas.

The report also noted that oil and gas is a $4.3 billion industry in Kansas and the task force had “considered the safety of all Kansans, along with the impacts to industry and the environment” in making its recommendation for further study before trying to declare a cause for the increased seismic activity.

Earthquake insurance “is almost a no-brainer, especially with these tremors we’re having,” said Chock Chapple, owner of the Chapple Insurance Group in Wichita.

It’s cheap. Adding it to a standard homeowners policy would cost $35 to $100 a year for a $100,000 house, according to quotes obtained by The Eagle from local insurance agents Thursday.

In Kansas, the insurance is available with deductibles of 2 and 5 percent of the covered amount – $2,000 or $5,000 on a $100,000 house.

According to the state Insurance Department, some companies have waiting periods of 30 to 60 days after a quake before people can buy quake insurance.

But Chapple said most companies have a much shorter moratorium on sales of 1-3 days after a quake in Kansas. On Thursday, his company insured a $500,000 home for $160 a year, he said.

The epicenter of Wednesday’s quake was near Milan, population 80, about 10 miles south of Conway Springs.

The town suffered structural damage to some of its older brick buildings and residents spent the night cleaning up broken glass and picking up belongings that the quake had randomly dumped from their shelves and cabinets.

Milan residents said the quake was preceded by increased oil and gas activity and apparent fracking in the area, accompanied by small but noticeable tremors that started around August.

One couple said they’d tried to buy earthquake insurance before Wednesday’s quake but were turned down because of a 60-day moratorium with their insurer.

One east Wichita agent said he hasn’t seen too many people coming in to buy quake insurance, because almost all his clients already have it.

State Farm agent Fred Thurlow said he’s been recommending it to customers – and buying it himself – for almost all of the 39 years he’s been an agent. He said about nine out of 10 customers take his advice on that.

The Kansas Insurance Department, citing statistics from the Insurance Information Institute, said only about 7 percent of homeowners in the Midwest carry quake insurance.

Thurlow said he started recommending quake insurance early in his career after some of his clients, who were geologists, asked for it.

“I figured if these geologists from oil companies figured they needed it, probably all of us need it,” he said. “That’s what insurance is about – eliminating your risk.”

The cost and terms of quake insurance are far more favorable to consumers here than in a state like California, where larger earthquakes have generated billions of dollars in claims for the industry.

Here, the cost is low because carriers “just haven’t had any losses” in Kansas, Chapple said.

But things could change if the quakes continue to grow, or if an earthquake like the Milan one hits a heavily populated area.

“Once the insurance companies start paying out losses, those rates will go up,” Chapple said.

Reach Dion Lefler at 316-268-6527 or dlefler@wichitaeagle.com.

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