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Will an Earthquake Shake your Insurance Foundation?

Study finds areas of Texas to be at a much higher risk for earthquake damage

Residents in parts of Texas have experienced a growth in the number of noticeable earthquakes that have shaken their property during the last decade. A recent report by the U.S. Geological Survey has found that significant parts of Texas are now at risk for earthquakes and that some areas of North Texas may have an earthquake risk similar to that of California.

Seven million people within earthquake zone

The report also indicates that Texas is now third on the overall list for earthquake damage, behind Oklahoma and California. More than 7 million people live in areas that are at risk for these human-induced earthquakes. Previously this risk was considered low for much of Texas, but the report indicates there has been a tenfold increase.

While officials note that the report is not cause for panic and the chances of a damaging earthquake remain small, homeowners should pay attention to the increase in the risk and the potential for further increase. In 2007, Oklahoma experienced 21 earthquakes greater than 3.0. In 2015, that number approached 6,000 and in 2016, the increase has been even greater.

Some homeowners in Oklahoma have begun to make damage claims to their insurers. One homeowner described the dozens of earthquakes her home had experienced and the numerous cracks to the structure that she claims they caused.

The insurance company denied her claim, stating it was due to natural subsidence of the soil and not within the scope of her coverage. She argues their denial was a bad faith . This is likely to become an issue for many homeowners in this zone identified by the U.S. Geological Survey as having this potential for natural and induced earthquakes.

Fracking to blame?

While the U.S. Geological Survey considers much of this earthquake activity to be human induced, there are other official sources that deny this connection, at least for some of the quakes that have occurred.

In one instance last year, the Texas Railroad Commission had reported that fracking and wastewater injection were not the cause of a series of small earthquakes in North Texas. This report contradicted an academic study of the area, but at the same time, the Commission study was not able to find sufficient evidence to attribute these quakes to natural causes.

For homeowners who experience structural damage to their homes, these types of conflicts could make it more difficult for them to obtain compensation from their insurers and more difficult for them to sue for a bad faith insurance denial, as the insurance company will be able to point to these apparent conflicts to defend their denials as being "reasonable."

While a large quake would gain immediate attention of state and federal authorities, for many homeowners, the hundreds of "minor" quakes could cause them significant damage that their insurance company may claim is not covered.

If you are within a region at high risk for quakes, you may need to carefully examine your insurance and review your coverage. After a major event takes place will be too late to make that review.

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