A discussion on how independent agents might want to respond after news of the November 8th earthquake in Massachusetts
On Sunday, November 8th, a 3.6 magnitude earthquake struck at 9:10 a.m. in an area of Buzzards Bay about nine miles south of New Bedford. The United States Geologic Service (USGS) website received over 14,000 visits reporting the quake. Fortunately, the quake caused no injuries. However, the Red Cross reported that they were aiding twenty people who were forced from their homes because their residences suffered some quake-caused structural damage.
Mass. agents acting as trusted advisors might look a little closer at earthquake insurance
The Sunday seaquake off New Bedford may have reminded some property owners that New England is not immune from seismic activity, and question if they have coverage for an earthquake. However, most insureds, if they even consider an earthquake risk may have no interest in following up on this insurance based on some misconceptions:
- Earthquake losses are covered by my homeowners or renter policy.
- The likelihood of a major earthquake in Massachusetts in insignificant.
- The cost of the insurance does not make sense for the likely damage
- The government will provide disaster relief that will take care of my damages.
No coverage for earthquakes under a homeowner policy
In most Massachusetts insurance agencies, Agency Checklists ventures to guess, earthquake insurance produces little or no commission. While aware that homeowner policies do not offer any earthquake coverage, agents may have no interest in marketing a separate earthquake policy because of the perceived bias that earthquake coverage for Massachusetts risks is not a good buy.
After Sunday’s earthquake, Agency Checklists did a little research and were surprised and a little perplexed. We were surprised because of the USGS and FEMA’s published reports about earthquake risks in the New England area and perplexed because we live in Boston, where geologists have identified specific earthquake damage enhancers.
Perhaps, some of the following facts we found may cause some agents to consider alerting their clients about the unlikely but extremely dangerous risk of an earthquake.
The risk in Massachusetts from an earthquake
In a March 2006 report, “Earthquakes a National Threat,” the USGS identified twenty-six urban areas in the United States at risk to significant seismic activity. The fourth urban area on the USGS’s listing was Boston.
The map above shows the seismic activity of the New England region from 1975 until 2017. The seismic activity in the New England area is constant. Some geologists predict that the Massachusetts area could have a 6.0 to 7.5 magnitude earthquake. In fact, since the settling of New England, there have been two.
In Central New Hampshire, a magnitude 6.5 earthquake occurred in 1638. The shaking from this quake was felt up into Canada and down into Boston. Around Boston, the quake’s aftershocks were felt for twenty days following the first earthquake.
Near Cape Ann in Gloucester, a Magnitude 6.0 earthquake occurred in 1755. Thirty-four miles south of Cape Ann, in Boston, about one-hundred chimneys were toppled, and as many as fifteen hundred other chimneys were damaged. Several brick buildings had walls collapse, and ground cracks opened.
The density and construction of the older infrastructure and buildings pose the greatest risk
Even though Boston and other Massachusetts cities have a relatively low risk of an earthquake of magnitude 6.0 or above, their dense concentrations of buildings and infrastructure create a high risk of damage. A commentator to the USGS’s 2006 report estimated that “[E]arthquakes 6.0 and larger in the Northeast would result in significant damage exceeding $42 Billion and kill…over 1500 people.”
While this commentator did not give the basis for their conclusions, others have identified specific problems unique to Boston’s risk of significant seismic damage from an earthquake.
Many of Boston’s older sections have buildings constructed with brick and masonry, construction materials highly susceptible to earthquake damage. However, what puts these buildings in Boston at even greater risk is that their foundations rest on artificial fill. This type of unconsolidated material tends to amplify and increase shaking.
The fill underlying much of the older sections of Boston poses a separate risk for major damage to buildings in earthquakes. Two professors, one from Harvard and the other from Tufts, conducted an extensive study of the artificial fill in and around Boston. Their focus was on mapping the risk of ground liquefaction of this fill in a seismic event of magnitude 6.0 or greater. Liquefaction takes place when loosely packed, water-logged sediments at or near the ground surface lose their strength in response to strong ground shaking. Liquefaction occurring beneath buildings and other structures can cause major damage during earthquakes.
Their paper, “Liquefaction Susceptibility Mapping in Boston, Massachusetts,” based on information obtained from over 12,000 boreholes, noted that “Boston, Massachusetts, is located in a region of moderate historic seismicity, where several historical events of about M[agnitude] 6.0 have occurred…The possibility, therefore, exists for the generation of earthquake-induced liquefaction of near-surface sediments in the Boston area.” They note that this liquefaction process in the case of an earthquake could undermine “large contiguous zones (possibly underlying entire city blocks).” Their map of Boston’s danger zones appears above, with the dark areas being those most susceptible to liquefaction in the case of a magnitude 6.0 or greater earthquake.
Looking at the risk of city living, it is time to get a quote
After looking at the risk and the cost, the benefit of earthquake insurance in Massachusetts most likely depends upon whether one lives in an urban or suburban area. The further from the city, the less value earthquake insurance might have. However, in writing this article from a home located in a Boston neighborhood that has a high risk of the fill under this house liquifying in a strong earthquake, I saw the value in getting a quote from my insurance agent for earthquake coverage.
If other city dwellers knew the risk, they too might want the coverage if their agent offered it to them.
Owen Gallagher
Insurance Coverage Legal Expert/Co-Founder & Publisher of Agency Checklists
Over the course of his legal career, Owen has argued a number of cases in the Massachusetts Supreme Judicial Court and has helped agents, insurance companies, and lawmakers alike with the complexities and idiosyncrasies of insurance law in the Commonwealth.
Contact him via the email link below:
For those looking for homeowner insurance companies
The following are two of Agency Checklists resources on the homeowner’s insurance marketplace and which companies are the largest writers of homeowner’s insurance in Massachusetts and the U.S.
