New Oklahoma earthquake insurance rule may apply to Arkansas agents

by The City Wire staff ([email protected]) 235 views 

The rash of earthquakes plaguing the state of Oklahoma have the state's governor and insurance head pushing for new regulations for insurance agents, but at least one local agent said any consumers fearing the big one should probably not worry.

The new emergency rule authorized by Gov. Mary Fallin, R-Okla., would require agents selling plans in the state, which could include Arkansas-based agents selling to consumers across the state line in Oklahoma, would require at least one hour of continuing education involving earthquake insurance every two years.

"This emergency rule will ensure insurance agents in our state stay up-to-date on earthquake information," Fallin said. "It's important as the market for earthquake insurance expands in Oklahoma that residents get reliable and accurate information from insurance agents to help them consider whether they need this additional coverage."

According to Michael McNutt, Fallin's press secretary, the new continuing education rule will affect any insurance agencies licensed to do business in the state of Oklahoma beginning Jan. 1, 2015, meaning many Arkansas agencies doing business over the border will be impacted.

Nathan Cooper, an agent with State Farm's Brad Scott Insurance in Fayetteville, said the rules will be new for many agents in the area since Arkansas has functioned like Oklahoma for many years, not requiring earthquake insurance education. Even though neither state has required the professional education hours in the past, Cooper said when customers have asked, he and others in his office have been educated on what are known as "riders" on homeowners and renters policies.

According to Cooper, while the frequency of earthquakes has increased in central Oklahoma with some even being felt as far away as Arkansas, there is not much reason for Fort Smith and Northwest Arkansas area residents to run out and buy a policy.

"I would say for my clients, 90-95% of them do not have earthquake coverage just because of the part of the state we live in and the threat is not imminent like it is in the eastern part of the state (near and along the New Madrid Fault Line)," he said.

For individuals interested in earthquake coverage, he said earthquake coverage is typically covered in most homeowners policies — at least the ones he sells through State Farm — and actually require a written opt-out form to drop the coverage from a typical homeowners policy. As a result, many times the issue is discussed with customers whether they inquire about coverage or not.

Cooper said the key to whether you might need to consider coverage in a non-seismically active area like eastern Oklahoma and western Arkansas is how your home is constructed. He said if a home is a typical frame home, there would be enough give to allow for swaying in the unlikely event of an earthquake. But for brick or stucco homes, or homes that are multi-story, he said it would not be a bad idea to keep the earthquake rider or add one if your policy does not already cover earthquake damage.

The total cost will run between $50 and $70 per year on average depending on the price of your home and the level of coverage. The deductible, he said, would also be a factor.

But even though local residents are not near active seismic zones, he said professional education like Oklahoma is mandating is not a bad idea since agents near seismic zones in central Oklahoma and eastern Arkansas need to be able to accurately discuss coverage and costs with customers.

"The closer you get to a real active fault, those (insurance) options (and costs) change," he said, adding, "The greater the risk, the greater the cost."

Oklahoma Insurance Commissioner John Doak echoed Cooper sentiments, adding that the continuing education requirement for agents like Cooper and others who may do business in Oklahoma was important for consumers wanting to know their options in terms of earthquake coverage.