Oklahoma Insurance Commissioner John Doak said Tuesday he is requiring property and casualty insurers to send each policyholder a clarification notice of earthquake coverage.
Doak said the decision is in response to the number of questions still surrounding Oklahoma's earthquake insurance coverage. Most homeowner's policies do not include earthquake coverage. If a homeowner wants coverage, it is generally required they purchase an earthquake endorsement in addition to their homeowner's policy.
"We know that most people don't read their policies," Doak said in a written statement. "Even if they do, the language can be tough to understand. 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."
On March 3, Doak issued a bulletin to insurers stating that the fact that earthquake insurance excludes loss due to "man-made" causes would be "correct." Such man-made causes could include mining, oil and gas exploration or production, according to the March 3 bulletin.
Insurance Department General Counsel Gordon Amini said in September it depended on the policy whether man-made quakes were covered or not.
“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.”
Doak's new call for clarification states that the Oklahoma Geological Survey determined there was a connection between wastewater injection wells and Oklahoma's increased seismicity. The correlation was announced by OGS in April.
Since the announcement, Doak said insurance companies reacted in three different ways: Some amended coverage to cover damage from wastewater injection wells; some waived the man-made exclusions; others excluded man-made or induced quakes.
Doak is requiring insurers to issue a clarifying notice to policyholders within 45 days. The notice must state, "Subject to all policy provisions, the coverage provided by this policy (IS) or (IS NOT) intended to cover earthquake damage resulting from..."
The provisions include extracting oil and gas, injecting or inserting any substance, storage of any substance or any combination.