If a man-made earthquake damages your home, would your
home insurance
cover your losses? The answer lies in the details of your
policy.
Standard homeowners and renters policies exclude damage from
earthquakes, but you can typically purchase either an endorsement
or a separate earthquake policy to add that protection. Earthquake
insurance covers a building and its contents for damage from
cracking and shaking caused by tremors.
However, earthquake coverage may exclude claims when human
activity causes earth movements. Policy terms vary not only among
states, but also among insurance companies in the same states.
Check with your agent to find out what coverage you have and what
additional insurance you may need.
Concern in the West

Earthquakes traditionally have been of highest concern in the
western U.S., where Alaska, California, Hawaii, Nevada and
Washington are the top states for natural earthquakes. However,
scientists with the U.S. Geological Survey USGS) say the number of
earthquakes has been increasing since 2000 in the middle section of
the country, in an area stretching from Alabama to Colorado to
Ohio. The number of quakes in this part of the country has gone
from an average of 21 annually between 1970 and 2000 to 50 in 2009,
87 in 2010 and 134 in 2011.
An April 2012, the USGS study linked this more frequent seismic
activity to increased
hydraulic fracturing
, or “fracking.” In fracking, water and other materials are
injected beneath the surface of the earth to extract natural gas
and oil from rock. Engineers say it’s not actually fracking that
causes earthquakes. Rather, it’s the disposal of post-fracking
wastewater into deep wells, which causes a seismic stress that
leads to earthquakes.
Thus far, the quakes reported have been small and caused no
damage. However, some residents of areas where fracking operations
are becoming more common are wondering whether they should buy
earthquake insurance
.
Tremors in Ohio

In northeastern Ohio, a dozen recent earthquakes have been tied
to wastewater from natural gas operations. Ohio saw 18 tremors in
2011 — double the number of the preceding year.
More than half the wastewater being pumped
underground is from other states
, but Ohioans have to deal with the resulting quakes.
However, more seismic activity in Ohio and the resulting media
coverage has not meant increased purchases of earthquake coverage,
according to Mary Bonelli, senior vice president of the Ohio
Insurance Institute OII). A recent OII survey found 44 percent of
insurance companies reported more inquiries about earthquake
insurance, but 75 percent of the respondents had not seen higher
sales.
The OII survey found that earthquake coverage varies widely —
particularly for man-made losses such as fracking. “Some
endorsements exclude or restrict these types of losses
specifically; others do not,” Bonelli says.
As with all types of policies and endorsements, she adds,
consumers need to know what is covered. “Ask your insurance agent
or company representative about coverage exclusions up front so you
know if this coverage fits your needs and expectations,” she
says.
The California Earthquake Authority CEA), a public-private
partnership that provides earthquake insurance, has not seen
policyholders report any loss that was claimed to be caused by
fracking, according to spokesperson D’Anne Ousley. Such a claim
“would be evaluated on its merits, based on a thorough
consideration of all the circumstances of that claim, and applying
CEA-policy terms in the fairest possible manner, in accordance with
the law,” Ousley adds.
Living near fracking sites

Amy Bach, executive director of United Policyholders, says
standard homeowners insurance policies contain “fairly broad
exclusions” for damage due to earth movements, sinkholes and
soil-related losses. United Policyholders is an information
resource for insurance consumers.
Whether insurance covers man-made quakes is “new territory,”
Bach adds. For that reason, “United Policyholders strongly suggests
that if you are calling to get a quote, tell the agent or broker
why — that you want to be sure that if there is a man-made quake
in this area, this policy would protect me.”
She also suggests keeping notes on the conversation, in case
there are disputes later about exactly what is covered.
While the risk of an earthquake in states like Ohio may seem
pretty remote, Bonelli adds, “That’s not saying they don’t or won’t
occur. Knowing that there’s a way to protect one of your biggest
assets — your home — from earthquakes for less than $100 annually
may provide a missing layer of security for some, but it’s not
necessarily for all.”