Is earthquake insurance on the rise? - KAIT Jonesboro, AR - Region 8 News, weather, sports

Is earthquake insurance on the rise?

By Keith Boles - bio | email feedback

JONESBORO, AR (KAIT) - For nearly a year homeowners who insure with State Farm Insurance Companies have been receiving letters telling them their earthquake insurance was going up. With the New Madrid fault constantly shaking and the rash of quakes in Central Arkansas we were wondering if State Farm knew something we didn't know.

Obviously no one can predict an earthquake. Gary Stephenson with State Farm says storm damage is one thing, earthquakes are another.

"We know that with a tornado or hail there is a regularity to it depending on the time of year. With earthquakes, not so much." Stephenson said.

The letter says that insurance premiums change all the time  in anticipation of future claims. This does not mean that the company is trying to build up a big pool of money in case something happens it means that the company is trying to keep up with rising costs in case claims are forthcoming.

Stephenson, "We need to keep up with increased costs in labor and building materials."

Stephenson says this is the first earthquake rate change for State Farm in 15 years. We called other insurance companies and found out that for the most part they don't even sell the quake insurance directly, homeowners have to purchase it from a 3rd party. Only Nationwide sells their own quake insurance.

Did the recent quakes bring on this rate increase? We asked Stephenson, He replied. "The recent events have been very minor to that has not been a significant factor. "

Stephenson says like any kind of insurance you need to shop around, ask questions  and be sure of what you are getting and what is covered before you write the check.

The bottom line is that this increase doesn't reflect any secret knowledge by the insurance company. It was just business.

Copyright 2011 KAIT. All rights reserved.

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