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Earthquake Insurance in Tennessee?

An earthquake in Memphis, Tennessee? That’s a joke, right? Actually not. Memphis sits in the New Madrid seismic zone, a region of the American heartland that gets 150 to 200 tiny earthquakes every year — so small they can only be detected by sensors. But experts say the region, which stretches from Arkansas to southern Illinois and includes parts of western Tennessee and Kentucky will get a big one.

When was the last “big one?” The winter of 1811-1812 according to the U.S. Geological Survey. And how big is “big?” There’s a 7 percent to 10 percent probability of a 7.5. to 8 point event. Lower that to a 6 point, and the probability jumps to 25 percent to 40 percent.

The threat is considered serious enough that the Shelby County emergency management agency (a county that includes the city of Memphis) makes seismic monitoring and earthquake readiness a part of their regular business. There’s a Center for Earthquake Research Information at the University of Memphis and its director says the “big one” is “inevitable.”

A 7.5 to 8 point quake would likely cause damage across the whole region, with a 6 point doing a good job of messing things up locally. Should residents go out and buy earthquake insurance? Most likely not.

Insurance is a product that by its very nature exists to hedge your bets. It’s a matter of what “might” happen. In some regions what’s likely to happen. Even with a 40 percent probability for a 6 point shake up, however, this region is just not historically prone to major earthquakes, a fact that insurance risk profiles will take into account. Seriously, the last one “big one” was 198 years ago!

I read these stories and I think about the first time I heard a prediction that the world would end the next day. I went to my father and he listened to my anxious recounting of what I’d seen in the newspaper. “If it does end,” he said, “what are you going to do about it?”

Overall, the fact that the New Madrid area is seismically active is interesting. Even if I had a house smack in the middle of the seismic zone, that’s about as far as I’d go. Would I take my chances that the “big one” will happen tomorrow? Yeah. Earthquake insurance in Tennessee? Pass.

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