Earthquake damage in Lincoln County

A 5.6 magnitude earthquake left homes like this one damaged in Lincoln County in 2011. Oklahoma Insurance Commissioner John Doak is working to educate Oklahomans about earthquake insurance coverage. (Photo courtesy of the Oklahoma Insurance Department)

In general, we prefer the marketplace to iron out issues rather than excessive regulation.

But some issues are frustrating and need clarification.

Take earthquake insurance in Oklahoma, for example.

Does your current earthquake insurance cover man-made quakes?

Oklahoma Insurance Department Commissioner John Doak issued his strongest statement last spring, expressing concern “that insurers could be denying claims based on the unsupported belief that these earthquakes were the result of fracking or injection well activity.”

In that March bulletin, Doak said “earthquake insurance excludes loss due, in whole or part, to any ‘man-made’ cause.”

In the month following Doak’s statement, 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.

On Aug. 4, Oklahoma Gov. Mary Fallin eventually agreed there was a “direct correlation” between Oklahoma’s increased earthquake activity and disposal wells. In August, Doak noted studies have concluded that many Oklahoma earthquakes were likely caused by wastewater disposal wells.

Ultimately, the Oklahoma Insurance Department says the decision to cover man-made or natural earthquakes is defined by individual insurance company policies.

Homeowners are on their own to wade through the fine print to determine their coverage.

“It depends on the policy, whether it covers man-made earthquakes or not,” Insurance Department General Counsel Gordon Amini said. “People need to ask the agent. There are plenty of policies out there that provide coverage in induced quakes.”

In late June, the Oklahoma Supreme Court ruled homeowners can sue for earthquake damages in trial courts.

This decision allows plaintiffs to sue oil and gas companies for earthquake damage if the seismicity is tied to injection well operations by energy companies.

Insurance claims could tie up the courts for years if our state suffers a catastrophic earthquake before we have enough scientific clarity.

We don’t believe earthquake coverage should be mandated, but companies should provide details of homeowner coverage — including cost and a list of what was, and was not, covered — within 10 days of purchasing a policy.

The sooner we have more transparency, the better. The parameters will be ill-defined until a concrete connection is made.