ADJUSTERS INTERNAT IONAL . COM 11 A D J U S T I N G T O D A Y U.S. Experience In the early 1800s, a series of earthquakes occurring over a three-month period made the Mississippi River flow backwards — temporarily — and rang church bells 1,000 miles away in Boston!1 The New Madrid Fault, which is approximately 150 miles south of St. Louis, has experienced a series of tremors that registered larger than a magnitude 8 on the Richter Scale. According to the Missouri State Emergency Management Agency (SEMA), the New Madrid Fault poses the highest earthquake risk in the United States, outside of the West Coast. The U.S. Geological Survey estimates there is a 25 percent to 40 percent chance that the fault could generate an earthquake of a magnitude 6 or greater within any 50-year period. SEMA projects that a quake of that size could inflict severe damage on older and poorly built structures, cause masonry buildings to shift or even collapse, cause widespread power outages — and even damage buildings, bridges and other structures specifically designed to withstand earthquakes. About 5,000 earthquakes are felt in the United States each year. Since 1900 earthquakes have occurred in 39 states and caused damage in all 50.2 Like floods, earthquakes can cause catastrophic damage and may also set off landslides, avalanches, flash floods and tsunamis. One of the worst catastrophes in U.S. history was the San Francisco earthquake of 1906. It was caused by the movement of the San Andreas fault, which extends 600 miles along the California coast. According to the National Geophysical Center, the quake caused direct quake losses of about $24 million and fire losses of about $500 million. Those figures would translate into total damages of $96 billion today.3 More recently, the Northridge earthquake, which struck Southern California in January 1994, was the most costly quake in U.S. history, causing an estimated $20 billion in total property damage. Not only has California experienced the most damaging earthquakes, it continues to have the greatest exposure to damage from quakes. Alaska, however, has had the most major earthquakes of any state — and the most violent quakes have occurred in the central United States. While the risk is not nearly as high as in the West, the East Coast and Northeast are seismically active and also vulnerable to earthquakes. A quake estimated to have been 7.5 in magnitude struck Charleston, South Carolina in 1886, killing more than 60 people. A 6.0 quake hit Boston in 1755 and a 5.8 earthquake More About Earthquakes . . . struck northern New York State in 1944. Experts believe that a quake of between 6.5 and 7.5 remains possible in the Northeast.4 Insurance Considerations Earthquakes can have a devastating impact on property owners because losses from them are not covered under standard homeowners or commercial insurance polices. Coverage is usually available for earthquake damage in the form of an endorsement to a home or commercial policy (see adjoining main article “Earthquake Insurance —What’s Your Exposure?” in this issue of Adjusting Today). Interestingly, automobiles are covered for earthquake damage under the “Comprehensive (Other than Collision)” part of the auto policy. Ostensibly this is because the exposure is small compared to the catastrophic exposure to damage that could occur to buildings and contents, and might be sustained in a business interruption loss.
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