As earthquakes occur with increasing frequency in Oklahoma, so does the damage. And with damage comes insurance claims.
In 2014, 100 earthquake claims were filed in Oklahoma. But John Doak, Oklahoma Insurance Department commissioner, said only eight of those claims were paid.
The issue of insurance claims is part of an ongoing debate about whether or not injecting wastewater from the oil and gas industry deep into the Earth’s crust is to blame for the rapid increase in earthquakes — and the damage they cause — both in Oklahoma and around the country.
“In light of the unsettled science, I am concerned that insurers could be denying claims based on the unsupported belief that these earthquakes were the result of fracking or injection well activity,” Doak wrote in a March 3 bulletin to insurers, underlining the word “unsupported.”
Some earthquake coverage excludes any losses that result from man-made causes, but policies can be unclear. On October 20, Doak issued another memo requiring each insurer to send clarification to policyholders, outlining the details of their policy.
“I issued this bulletin so that, hopefully, Oklahoma consumers get a better idea of exactly what kind of coverage they have for earthquakes. The goal here is consumer education and protection,” he said in a written statement.
In the month following Doak’s first memo, on April 21, the Oklahoma Geological Survey said it was “very likely” the majority of Oklahoma’s quakes were triggered by injection wells associated with oil and gas production. Now a new study suggests that the uptick in quakes is primarily caused by human activity and Oklahoma’s own Governor Mary Fallin agreed there was a “direct correlation” between Oklahoma’s increased earthquake activity and disposal wells.
In August 2015, the Sooner State surpassed their previous 2014 earthquake record. As seismic science evolves, the state Insurance Department says the decision to cover man-made or natural earthquakes is defined by individual insurance company policies.
Although the figures aren’t publicly available, Doak told The Oklahoman around 15 percent of state residents had earthquake insurance last January, compared to about 10 percent of California residents. Earthquake coverage is available as a policy endorsement, defined as a clause that adds or removes coverage from an existing clause.
But why would a claim be denied?
Insurance Department General Counsel Gordon Amini said coverage of man-made earthquakes — those caused by injection wells — would depend on the insurance company.
“It depends on the policy, whether it covers man-made earthquakes or not,” Amini said. “People need to ask the agent. There are plenty of policies out there that provide coverage in induced quakes.”
But claims for mild to moderate damage can get complicated very quickly.
“Earthquake insurance is catastrophic coverage,” Doak told News on 6 of Tulsa in July. “You really want it if the home comes down, or the fascia comes off; it’s not for small cracks.”
Rep. Cory Williams, D-Stillwater, has mild earthquake damage to his home, damage he will repair himself because his claim was not covered by the insurance company.
“They (insurance companies) specifically exempt it (man-made earthquakes) long before the governor admitted it,” he said. “You have the risk management industry saying this is happening, there is a correlation and we (insurance companies) don’t want to be on the hook, but we can’t get our state officials to say it to protect our citizens and resources.
“Now there are people with earthquake insurance that really is no good because any earthquake we have is likely going to be caused by oil and gas, so people have been paying this premium and it won’t do any good. People have to pick up the pieces and put their lives together long before the litigation settles out.”
Summars writes for the Enid, Oklahoma News & Eagle.