“I thought something exploded” – Shock-earthquake experience of a New York realtor | Insurance business America
Rare 4.8 magnitude quake sheds light on insurance gap for earthquakes in the Northeast
Disaster and flood
By Jen Frost
The rare magnitude 4.8 earthquake that struck the Northeast is unlikely to be an insurance event, but it is a timely reminder of the region’s earthquake insurance gap.
The earthquake, whose epicenter was in Lebanon, New Jersey, occurred Friday morning and was felt in surrounding states.
“I was in the kitchen and suddenly the windows shook and then I felt the walls rumbling – I thought something had exploded in the basement,” Dale Krupowicz, chief operating officer and partner at Personal Risk Management Solutions, told IBA. “It was like it just kept building up – at first glance it seems so long, but the whole thing probably lasted maybe 10 seconds.”
The wealthy insurance company’s (HNW) phones had been ringing all morning and afternoon since the earthquake, Krupowicz said. Fortunately, so far all customers have reported that they are safe. Shortly after the earthquake, the HNW broker reached out to insureds via email to provide them with information about earthquake insurance and what may and may not be covered.
According to HNW Broker, many Northeast customers shy away from earthquake insurance
Krupowicz estimates that only 10% of the company’s wealthy customers on the East Coast choose to purchase earthquake insurance (counting those in condos and co-ops, the number is closer to 40%), compared to 60% on the West Coast. That could change.
“Not a lot of people buy it because they think there’s no need, but it turns out there’s a big fault line in our area that runs from where I live in Westchester County all the way to New Jersey,” Krupowicz said. “When our office takes on a new client, we add an earthquake analysis – and some people don’t even pay attention to it, but I feel like they might now because everyone has felt it.”
- 40 other earthquakes of magnitude 3 or greater occurred within 250 km of the April 5, 2024 earthquake – of which the most recent was the largest
- Thirteen earthquakes of magnitude 4.5 or greater were recorded within 500 km of the April 5, 2024 earthquake
- The magnitude 5.8 Mineral Virginia earthquake occurred on August 23, 2011 and caused significant damage
Less than a quarter of homeowners in the Northeast believed they had earthquake insurance
According to the Insurance Information Institute (Triple-I), earthquake insurance is not covered as standard in most homeowners and business policies. Instead, coverage is sold as an endorsement or separate insurance policy.
Homeowners in the Northeast are among those least likely to be insured. A 2020 Triple I survey found that 21% of homeowners surveyed in the area had earthquake insurance.
In which regions does earthquake insurance have the highest?
The percentage of homeowners who reported having earthquake insurance in a 2020 Triple I survey:
- West – 28%
- South – 25%
- Northeast – 21%
- Midwest – 16%
The impact was felt in New York City
The rumblings of the New Jersey quake were felt in densely populated and vulnerable New York City.
Wow! An M4.8 arrived in New Jersey around 10:30 a.m. local time this morning. From Maine to Washington DC, tremors were felt everywhere. Did you feel this earthquake? Share your experiences here: https://t.co/xdohQbzpcq https://t.co/ADcDLsTp8b pic.twitter.com/bAjEbSgvwc
— USGS Earthquakes (@USGS_Quakes) April 5, 2024
Many buildings in the city were built before 1995, when earthquake regulations were added to the building code. According to the NYC Hazard Mitigation Plan, many are unreinforced brick buildings that can collapse outward in a strong earthquake.
Insurers may expect minor claims from owners of businesses such as grocery stores where glass bottles may have fallen off shelves, but the impact on insurance is likely to be limited. That’s what Janet Ruiz, director of strategic communications at Triple-I, says. She said more damage could occur, but generally it would require an earthquake of magnitude 5.0 or greater, or one that strikes “very close to the surface.”
Like Krupowicz, Ruiz predicted a surge in interest in earthquake insurance after the event.
“Especially if it’s just an add-on to your homeowner’s insurance, we typically see a slight increase [following an earthquake]said Ruiz. “[In this case] It shook so hard that people could really pay attention.”
After the earthquake, the American Property Casualty Insurance Association (APCIA) urged consumers to consider whether earthquake insurance might be right for them.
“Earthquakes are among the most unpredictable natural disasters,” said Karen Collins, vice president of property and environment at APCIA. “Even in the most earthquake-prone states, relatively few people have earthquake insurance, creating a large gap in insurance coverage for many homeowners and businesses and leaving people vulnerable to financial disaster.”
Did you or your insurance customers feel the effects of the New Jersey earthquake? Share your experiences in the comments below.
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2024-04-05 18:13:04
www.insurancebusinessmag.com
