Seattle Quake Gives Insurers The Jitters Some Companies Impose Moratorium On New Policies

Some insurance companies have temporarily stopped selling earthquake policies after Western Washington was rattled by a quake over the weekend.

Homeowners flooded some insurers with inquiries about such policies after Saturday’s 5.0-magnitude quake, which jarred a lot of nerves but caused only minor damage.

Stuart Riches, an agent at PEMCO Insurance, said his agency received as many as 200 calls Monday about quake insurance.

“With the combination of the Kobe quake and then this one on Saturday night, people are really saying, `Maybe I ought to get that earthquake insurance,”’ he said.

They may be out of luck for a while, however. Some insurers, including Allstate and State Farm, imposed a 30-day moratorium on issuing new policies. PEMCO will only sell policies with a 25 percent deductible during that period.

Safeco is continuing to sell policies, but also would have suspended sales if the quake had been more severe than 5.0.

State Insurance Commissioner Deborah Senn said it is common practice for insurance companies to suspend approval of new policies after natural disasters. But she criticized the 30-day length of this moratorium, saying quake suspensions in the past have been for about 10 days.

“There’s a lot of insurance company jitteriness over earthquakes on new policies,” she said.

Because of the threat of aftershocks, selling insurance immediately after a quake is “like selling fire insurance to someone whose house is still burning,” said Steve Methner, a State Farm spokesman in Olympia.

Senn said she would reintroduce legislation that would require insurers to let customers know their homeowner policies do not automatically include earthquake coverage. The industry estimates only about 15 percent of Washington homeowners have quake insurance.

After the moratoriums end, consumers still may find it tougher to get earthquake policies. Safeco, for example, recently imposed a rule that hot-water tanks be bolted down or secured with straps.

Safeco and PEMCO also are both raising their standard deductibles from 5 percent to 10 percent of a property’s total value, and the deductibles apply separately to a building’s structure and contents.