Earthquake insurance in Nevada uncommon despite seismic activity

Pat McCready Lucus, owner of Las Vegas-based McCready Insurance Services, said earthquake insurance is at the top of her mind.

After Las Vegas felt the tremors of two California earthquakes Thursday and Friday, “we do expect more people to be looking” for earthquake insurance, she said. “I’ll be looking into it myself.”

There’s a 15 to 40 percent chance an earthquake with a 5.0 magnitude or higher will hit near Las Vegas within the next 50 years, according to the United States Geological Survey. But most homeowners and business owners in Nevada are betting against a major earthquake and forgoing supplementary insurance, experts say.

On Friday night, Southern California was hit with a 7.1 magnitude earthquake, powerful enough to be felt in the Las Vegas Valley. This came just one day after a 6.4 magnitude quake hit roughly the same area.

According to a 2016 report from the Nevada Department of Business and Industry’s Division of Insurance, only Alaska and California rank higher than Nevada for major earthquakes — those with a magnitude of 5.0 or higher.

Still, most business and homeowners in the state don’t think earthquake coverage is worth the cost, said Virginia Chatwin, owner of Centurion Insurance Services in Henderson.

Premiums for earthquake insurance vary greatly — the building’s location, age, layout, replacement cost and deductible all play a role in costs — but Chatwin said the price of some policies are “not that bad.”

She estimated homeowners who pay between $700 and $1,000 for annual home insurance can expect to pay another $300 to $500 to add an earthquake insurance policy.

“Hardly anyone has earthquake coverage,” she said. “Most people don’t want to pay.”

Fault lines

The 2016 report says no area of Nevada is completely safe from earthquakes, but DOI insurance commissioner Barbara Richardson said many of the fault lines in Nevada are farfrom populated areas.

“Just because the state is prone to earthquakes doesn’t mean the population is prone to being affected by the earthquake,” she said.

Richardson said the DOI doesn’t advocate for certain policies, but she suggests homeowners and businesses at least consider purchasing coverage. Without it, she said homeowners are at risk of damage to their home or property.

After last week’s earthquakes, Richardson expects to see more homeowners will consider additional coverage.

“Any time there’s any kind of natural disaster of any sort, we see an increase in interest in folks actually trying to figure out whether or not the risk to them is worth the purchase,” she said.

Costs vs. coverage

Rachael Rizzi, vice president of sales and marketing for Branch Benefits Consultants — a Las Vegas-based independent insurance agency that represents multiple carriers — said the company recommends earthquake coverage “as a best practice,” but most people in Southern Nevada hold the perception that it is not necessary.

Chatwin said there hasn’t been a large enough earthquake in Nevada to make residents seriously consider adding the extra coverage. The last major Nevada earthquake was a 6.0 magnitude that hit Elko County in 2008, causing $10.5 million worth of damage but no serious injuries.

“When you start adding it up, people say I’m not going to go for it because it’s not required in my mortgage,” she said. As of Monday morning, Chatwin said she hadn’t heard any interest in earthquake coverage from her clients.

And because earthquakes are prevalent in only a few states, Chatwin said most home insurance policies only offer earthquake coverage as an additional policy or separate coverage. Rizzi said earthquake coverage is typically excluded from most homeowners and commercial policies “due to their catastrophic nature.”

Those who are suddenly interested in additional insurance after the latest tremors will have to wait to add a new policy, Rizzi said.

“Most carriers have declared a moratorium on issuing new policies, which will typically last for the next 30 (to) 60 days, depending upon the seismic activity from aftershocks,” she said.

Contact Bailey Schulz at bschulz@reviewjournal.com or 702-383-0233. Follow @bailey_schulz on Twitter.