Most damage from 5.8-magnitude Pawnee earthquake not covered by insurance
PAWNEE — The sidewalks around the more than 110-year old Arkansas Valley National Bank building are still roped off to guard pedestrians from falling chunks of sandstone nearly two months after a 5.8-magnitude earthquake shook Pawnee.
The hand-cut sandstone facade of the building, a historic landmark in downtown Pawnee, sustained heavy damage in the Sept. 3 earthquake.
Bank building owner Keith Cheatham just laughed when asked if he had earthquake insurance.
"If you have earthquake damage, you are pretty much on a self-help program," he said.
Cheatham's office for his real estate business and a beauty shop are housed in the old bank building.
He is still collecting estimates on how much it will cost to repair the old bank building, but it is difficult to even find workers who have the skills to repair the building's old stonework.
"Most the people who know anything about buildings like this have been dead for 50 years," he said.
As of Sept. 30, only four insurance claims worth $24,232 have been paid out of the 274 claims filed for damage from the Sept. 3 earthquake, according to the Oklahoma Insurance Department.
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Pawnee Mayor Brad Sewell said that while most of the damage in Pawnee is superficial, there will be residents who experience significant financial loss from the earthquake.
"The worst of the damage in the aftermath has kind of come and gone. What we are dealing with now is damage that isn't as urgent, but it's a lot of cosmetic damage," Sewell said. "That's not to say we didn't have a few property owners who had extensive damage who are really having to make some plans and tough decisions now."
Most people in the Pawnee area who sustained property damage lacked insurance coverage for earthquakes, said Oklahoma Insurance Commissioner John Doak.
Earthquake insurance policies typically have high deductibles and are meant to only cover damage from catastrophic loss, said Doak. Each individual property owner has to make a decision on whether purchasing coverage is right for them, he said.
"I have earthquake insurance personally on my home — if you do not have it, you are basically self-insuring that entire risk element with no other means to cover the cost," Doak said.
The state Insurance Department has also worked to dispel myths about insurance coverage and when it can be purchased. Some residents in the Pawnee area wrongly believed they were unable to purchase earthquake insurance for as long as six months after an earthquake in the state, because of a moratorium on new policies after a quake, Doak said.
Some insurers do institute a moratorium on new earthquake policies after a major seismic event, but they are typically brief. The purpose of a moratorium on new policies is to clearly separate one earthquake from another so that coverage cannot be purchased for damage that has already occurred from a past event.
Many insurers are already writing new policies again after the Sept. 3 earthquake, Doak said.
"We haven't encountered any company with a moratorium period longer than 60 days," he said.
State Farm, the largest property and casualty insurer in Oklahoma with a 27 percent market share, said it instituted a 30 day moratorium on new earthquake policies after the Sept. 3 quake.
"Every time there is a moderate to large quake, we receive more inquiries about our coverage and the (earthquake) endorsement," said Jim Camoriano, a spokesman for State Farm.
Out of the more than 200 claims for damage from the Sept. 3 quake reported to the state Insurance Department, 39 were closed without payment as of Sept. 30, and 17 were denied, two were under investigation and 212 are still open.
Typically, earthquake claims have a longer adjustment period because of the need for a structural inspection of the damage, said Kelly Dexter, a spokeswoman for the state Insurance Department. While the Insurance Department doesn't collect the specific details of every claim, the agency said that in most cases where claims were closed without payment, the damage was less than the deductible or the adjuster determined the damage was not caused by an earthquake.
An Arkansas trial attorney, who is already pursuing a class-action lawsuit on behalf of Oklahoma property owners against oil and gas companies for damage sustained in a 2011 Prague earthquake, is looking into filing a similar court action for property owners in the Pawnee area.
Little Rock attorney Scott Poynter, who has toured damage in the Pawnee area, expects that at least some property owners in the area will experience a total financial loss on their homes or commercial buildings.
Brick chimneys, a common structural element in Oklahoma ranch-style homes, tend to topple during the stronger quakes Oklahoma has sustained over the past few years.
"It's very much like the damage I saw in Prague — you have a lot of chimneys that were destroyed," Poynter said. "If they were on the exterior side of the home, they fell down into the roof. Lots of houses that were faced with brick or stone also had a lot of damage."
Poynter also has filed a potential class-action lawsuit led by Prague resident Jennifer Lin Cooper, seeking damages related to the 2011 Prague earthquake. Cooper is seeking class-action status to include people in Lincoln County and eight surrounding counties whose homes or home values have been damaged by the earthquakes.
It's difficult to estimate the cost of property damage from the 5.8-magnitude earthquake, the largest ever recorded in Oklahoma. The state Department of Emergency Management said it has not gathered data on damage costs from the quake.
In 2015, the state Supreme Court reversed a lower court's decision to dismiss Cooper's case. The ruling secures the right of Oklahomans to sue the oil and gas companies for their property damage claims and have their case heard before a jury, Poynter said.
"Most people didn't have insurance in Prague," Poynter said. "In Pawnee, I haven't met anyone who has told me they had insurance and the claim has been paid."