Post on 11-Jul-2020
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The Economics of the
“Big Shake”
Causes, Contracts and Concerns
Dan Dyce, CPCU RPA
February 13, 2017
What Causes Earthquakes?
2USGS.gov
Pacific
Plate
North American
Plate
Intraplate Earthquake
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• An intraplate earthquake occurs in the interior of a tectonic plate.
• Examples of damaging intraplate earthquakes are the devastating the 1811-1812 earthquakes
in New Madrid, Missouri, and the 1886 earthquake in Charleston, South Carolina.
• Oklahoma is now experiencing this kind of earthquake.
Wikipedia
9-3-2016 5.8 Pawnee Earthquake
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Oklahoma’s largest temblor on record,
according to the U.S. Geological Survey
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"It's an old historical building about 100 years old. It's still standing but some
of the outer layers of sandstone fell said Pawnee Mayor Brad Sewell.6
Florida Has Earthquakes
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• An earthquake occurred near St. Augustine, in
January 1879. Reports of heavy shaking
knocked plaster from walls and articles from
shelves.
• Similar damage was reported at Daytona
Beach, 50 miles south.
USGS.gov
Texas Has Earthquakes
• The 1931 Western Texas earthquake heavily
damaged buildings at Valentine.
• Many chimneys fell.
• Adobe buildings suffered most, and cement
and brick walls were badly cracked.
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California Has Earthquakes
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A Sampling of California's Largest Earthquakes (Since 1800, ranked by magnitude)
7.9 Jan. 9, 1857 Fort Tejon7.9 April 18, 1906 San Francisco
7.8 March 26, 1872 Owens Valley
7.5 July 21, 1952 Kern County
6.9 Oct. 17, 1989 Loma Prieta 636.7 Jan. 17, 1994 Northridge 61
6.6 Feb 9, 1971 San Fernando 65
Is there any state in the USA that has
not experienced an earthquake?
• According to the U.S.G.S. every state in the
U.S. has experienced an earthquake.
• The two states with the fewest earthquakes
• Florida and North Dakota.
• If you are trying to get away from
earthquakes, move to:
• Antarctica. According to the USGS it has fewer
earthquakes than any other continent.10
Earthquake Terms
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Strike-Slip Faults
1906 San Francisco earthquake, M 7.9
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Thrust Faults
1954 Dixie Valley, NV earthquake (M7.2)
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Illustrations credit: Exponent
Shaking Forces: effects of acceleration on vertical objects
Ground Motion & Damage
Shaking Forces:Illustration of racking distortion in walls
Illustration credit: Exponent
Ground Motion & DamageLarge “X” crack in masonry
wall between Windows.
Large “X” crack in masonry
wall between Windows.
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X-cracks are Common with Earthquake
Exterior Earthquakes X Cracks
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How are Earthquakes Measured?
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Richter Scale –
• Measures the amount of energy released• Each whole number step is about 10 times
larger and has 31 times more energy.
Modified Mercalli Scale
• Shows the intensity of shaking at a site
• Intensity refers to the effects experienced by people and buildings at each location
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Richter vs.
Instrumental
Intensity
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M6.7 Northridge EQ (1994)
M6.8 New Madrid EQ (1895)Geology makes a difference!
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Sign up for instant
notification to a
cell phone about
earthquakes.
Free from USGS
Earthquake
Notification
Service Dyce
Clip Art
USGS
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CISN.org
www.cisn.org
https://sslearthquake.usgs.gov/ens/
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https://sslearthquake.usgs.gov/ens/newprofile
myemail@gmail.com
HTML Format
Mycellnumber@att.net
Short Format
Example of Earthquake Notification Profile
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As soon as you hear about an EQ, go look for the ShakeMap
USGS
earthquake.usgs.gov/earthquakes/shakemap/
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A ShakeMap
helps you planyour response.
http://earthquake.usgs.gov/earthquakes/dyfi/
“Did You Feel it” Map May be a Useful Tool
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Santa Rosa is 40 miles from the Napa EQ
USGS
www.cisn.org
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What do these tags mean?
1. Ground Failure:
Shaking causes soil failure that causes damage to the structures supported by the soil.
2. Structural Failure:
The ground is not damaged, but there is sufficient shaking to cause structures to move and deform.
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Earthquakes Cause Damage Two Ways
Dyce photo - 7.1, Christchurch New Zealand, September 4, 2010
Liquefaction is a form of ground failure
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Ground Failure: Liquefaction
Photo Credit: NISEE
Geotechnical Issues Lateral Spreading in New Zealand
Dyce photo
Lateral Spreading in New Zealand
Example of Ground Failure: Rockslides / Landslides
Photo Credit: Exponent
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From Oklahoma Dept. of Insurance
As of 1-1-2015,
the OklahomaDepartment of
Insurance
beganenforcing that
all resident agents,
CSRs, and adjusters with a propertyline of authority will be required to complete
one hour of earthquake CE per renewal cycle.
March 3, 2015 Bulletin
2015-02Oklahoma Commissioner Warns Insurers on
Denial of Earthquake Claims
• Oklahoma Insurance Department said insurance companies should make sure their adjusters are trained on how to handle an earthquake claim.
• Beginning this year, property/casualty insurance agents (and adjusters) are required to take one hour of continuing education on earthquake insurance.
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CALIFORNIA INSURANCE ADJUSTER TRAINING
FOR EVALUATING EARTHQUAKE DAMAGE
(a) California Fair Claims Regulations
(b) Determination of scope of loss
(c) Loss estimation techniques
(d) When to call for an engineer or expert
(e) DOI Earthquake Mediation Program
(f) Assessment of damage to concrete surfaces
(g) Subsequently discovered damage
(h) Programs to assist earthquake victims
CALIFORNIA CODE OF REGULATIONS, TITLE 10. CHAPTER 5, SUBCHAPTER 7.5.1
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Openclipart.org
Adjusting a
Fracking / Earthquake Claim
• Investigate like any other
earthquake claim
• Make insured declare the
date of loss
• Find the ShakeMap for that
date of loss
• If damage matches the intensity of shaking
pay the claim
• “Man Made” exclusion in insurance policy 42
Bing Clip Art
Residential Earthquake Damage is
not Covered by a
Homeowner Fire Policy
• Earthquake coverage is excluded in a
homeowners fire policy
• But earthquake coverage can be added to a
homeowners policy by purchasing an
earthquake coverage endorsement.
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Example of HO Exclusion: We do not Cover…
How Much does Earthquake
Insurance Cost?
• Oklahoma Residential Cost for Earthquake
Insurance
• Cost: $0.06 to $0.30 per $1,000 of the
dwelling limit. (www.ok.gov/oid)
• $200,000 home replacement cost
• Annual premium = $60 to $600
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What Does Residential Earthquake
Insurance Cover?
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5%
Insuring Agreement
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Seismic Event is defined, 3, 7, 15
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EQ New Policy Aftershock Claim
Day 1 Day 15Day 3 Day 7
De
du
ctib
le =
% n
ot
$$
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(ALE, Loss of Use)
(Real property)
(Personal property)
(For earthquake damage)Masonry Veneer Coverage
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Flood Damage not Covered
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Ensuing Loss Exceptions
• While shakes from earthquakes are clearly
excluded under the standard HO policy, the
standard earth movement exclusion contains
an exception for:
– Fire
– Explosion,
– Breakage of glass
– Theft
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Sfgov.org
Losses Excluded
1. Fire or explosion.
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Photo credit USGS
1906 San Francisco
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