Earthquake insurance getting harder to come by


With Allstate's announced phaseout of earthquake coverage in Portland and elsewhere, decisions about insuring one's house against the catastrophic earthquake expected here anytime within the next couple of centuries just got dicier. Allstate announced in June it was dropping its earthquake coverage nationwide for new policies, and for renewal of existing policies beginning in September.

Plus, some of the other insurance companies who still provide local earthquake coverage are raising their rates, although apparently not all; a local resident with Safeco home insurance tells us that he was just renewed for the coverage, and at no apparent increase in premium.

However, a State Farm agent who's had his office in Sellwood for eighteen years reports that although his company does still offer earthquake coverage, price increases may be on the horizon. 'We DO still sell earthquake coverage, but they have warned us to expect some increases,' says Doug Menely. Most of Menely's 1,800 clients are in the 97202 and 97206 ZIP codes.

Some agents speculate that the well-publicized losses elsewhere, such resulting from the recent disastrous hurricanes in the Gulf states, have caused many insurance companies to raise rates in low-risk Oregon. But though Oregon is indeed a relatively low-risk state for hurricanes, geologists say insurance companies are now factoring in the risk of a Northwest catastrophic earthquake, on the scale of the recent quakes centered off the coast of Indonesia.

'The insurance companies are reacting to the recent discoveries about the potential for a magnitude 9 or larger earthquake in the Cascadia Subduction Zone sitting off our coast,' says Oregon Department of Geology's Earth Science Information Officer James Roddey. 'What they are realizing is that the earthquake potential here in the Northwest is much greater than they'd thought in the past.'

Such insurance has always been offered by all providers with a large deductible--typically 10% of the value of the home--but the remaining risk is now viewed as still being too great, apparently, by Allstate.

Since Portland-area earthquake insurance is becoming more expensive, though it is still more affordable than what companies now charge in California, some homeowners balance the cost against the chances of a large earthquake hitting the Inner Southeast area. 'In Sellwood, there's a tremendous amount of rock under us, and it's pretty solid,' says Menely. On the other hand, Portland does have major faults, including the Oatfield, East Bank and Portland Hills faults. And one of these runs right through Westmoreland (crossing the Bybee-17th intersection) and on into Milwaukie, says Roddey.

Locally-epicentered earthquakes are thus a concern, but the consequences wouldn't be as widespread or as catastrophic as would be the huge shaking that will occur at the next slip within the Cascadia Subduction Zone offshore, as last happened in 1700. It would be similar to what happened off the coast of Indonesia.

'There's a 15 percent chance in our lifetimes of a 9-plus magnitude earthquake in the 600-mile long fault off the Oregon coast,' says Roddey. 'And when it eventually ruptures, the whole Northwest will be affected.'

Besides buying earthquake insurance for his own Oregon City house, Roddey has had his house bolted to its foundation, has strapped down his water heater, and has done other earthquake-proofing.

Meanwhile, Inner Southeast has many wood-frame houses, which flex and thus stand up fairly well in earthquakes, Roddey says. And, the local faults don't move that often in the Portland area, he adds. The much greater danger for this area will be the next subduction zone earthquake off the west coast, he reiterates.

As for changes in insurance policies, about 30 percent of Inner Southeast Portland's insured households and businesses are directly impacted, inasmuch as that's the estimate of those in the area who have purchased earthquake insurance, say the local insurance agents.

However 22,000 of them will have to seek alternatives this month. That's the number of structures in Oregon which have till now been covered by Allstate earthquake policies, out of the total of 120,000 structures that Allstate insures in Oregon, according to the Insurance Journal. For those residents and businesspeople, it is clear, there are still quite a few alternative sources of earthquake protection.