An AI Earthquake Insurance article Gone Awry

AI or Artificial Intelligence is out there and it is being used more and more. AI can be a great product. However relying on it for specifics about insurance – could potentially be dangerous. To that end QuakeCov attempted to use a somewhat famous new AI tool to produce this article, specific to Earthquake Insurance. Although the AI product is frankly awesome- I was surprised how much information was either totally or partially inaccurate. Additionally I felt that much of information lacked context. Details – not a lot. Lastly I could not confirm numerous specifics and don’t know where they came from. In one case -I can not fully say if its even right or wrong.

The following article you are about to read contains inaccuracies. Please do not make any insurance decisions based on this article. This article is used soley for the purposes of warning consumers to view insurance articles online with scepticism. If you came to our site to learn about earthquake insurance, terrific. But do not use this article as a referance point. Choose another, kindly.

I attempted to write an AI generated article about Earthquake Insurance and well it did not go too well.

An Earthquake Insurance Article – Written by AI and Inaccurate

I asked the AI chatbot to write an article about the history of earthquake insurance

and this is what I got:

“Earthquakes have been a part of human history since time immemorial. These natural disasters can strike without warning, causing massive destruction and loss of life. In the aftermath of a catastrophic earthquake, individuals and communities are left to pick up the pieces and rebuild their lives. One way in which people have sought to mitigate the financial impact of earthquakes is through earthquake insurance.

The earliest known example of earthquake insurance dates back to ancient China, where it was known as the “earthquake fund.” In the event of an earthquake, members of the community would contribute to the fund, which was then used to assist those who had suffered damage or loss. This system continued for centuries, with the fund being managed by local officials and used to finance reconstruction projects.

In the modern era, earthquake insurance began to take shape in the aftermath of the San Francisco earthquake of 1906. This devastating earthquake, which destroyed much of the city and caused widespread damage, sparked a debate about the need for earthquake insurance. Some argued that earthquakes were an act of God, and therefore should not be insured against. Others argued that the risk was too great, and that insurance was necessary to protect against the financial impact of earthquakes.

Despite these debates, earthquake insurance slowly began to gain popularity in the United States in the early 20th century. In 1909, the state of California created the California Earthquake Authority, which was tasked with providing earthquake insurance to homeowners in the state. This marked the beginning of the modern earthquake insurance industry.

Over the years, earthquake insurance has evolved to meet the changing needs of homeowners and businesses. In the 1960s, the federal government established the National Flood Insurance Program, which included coverage for earthquake damage. In the 1980s, new forms of coverage were developed, including business interruption insurance and contingent business interruption insurance, which provided coverage for lost income in the event of an earthquake.

Despite these advances, earthquake insurance remains a complex and often misunderstood area of insurance. Many homeowners are unaware of the risks they face from earthquakes, and may not understand the coverage they need to protect their homes and belongings. As earthquakes continue to pose a threat around the world, it is important for individuals and communities to understand the history and importance of earthquake insurance. By working together, we can help mitigate the financial impact of these devastating natural disasters and ensure that our communities are able to recover and rebuild.”

There are a number of inaccuracies in this short article it wrote: 1. The CEA or California Earthquake Authority was not created in 1909. And to our knowledge the NFIP has Never provided coverage for earthquakes, just floods. As for the ancient China Earthquake Insurance policies? You’ve got me on that one. Sometimes its more work to confirm an inaccuracy that its worth it. But I cannot find a referance point for this so called ‘earthquake fund’.

Then I asked it to explain Earthquake Insurance to me, and this was the response:

“Earthquake insurance is a type of insurance policy that provides financial protection to homeowners and businesses in the event of an earthquake. It covers the cost of repairing or rebuilding structures that have been damaged or destroyed by an earthquake.

Earthquake insurance is different from standard homeowners insurance, which typically does not cover earthquake damage. In areas that are prone to earthquakes, earthquake insurance may be required by law or by mortgage lenders.

Earthquake insurance policies typically cover damage to the physical structure of a building, including the foundation, walls, and roof. It may also cover damage to personal property, such as furniture, appliances, and electronics. Some policies may also include coverage for additional living expenses, such as hotel accommodations or temporary housing, if the policyholder is forced to leave their home due to earthquake damage.

It is important to note that earthquake insurance policies typically have a high deductible, which is the amount that the policyholder must pay out of pocket before the insurance coverage kicks in. Deductibles for earthquake insurance can range from 5% to 25% of the insured value of the property, depending on the policy and the location of the property.

Earthquake insurance premiums can also vary depending on a number of factors, including the location of the property, the age and type of building, and the level of coverage. In general, properties located in areas that are prone to earthquakes will have higher premiums than those in low-risk areas.

In conclusion, earthquake insurance can provide valuable financial protection to homeowners and businesses in the event of an earthquake. It is important to carefully consider the risks and costs associated with earthquakes when deciding whether to purchase earthquake insurance, and to review the policy details and coverage limits carefully to ensure that it meets your needs.”

This response – was on the whole – probably better than the previous one. My notes include the fact that you do not have to be a “homeowner” to get an earthquake insurance policy. You could be a renter, condo owner, or a building owner. In addition the word homeowner has a somewhat specific meaning in the Insurance landscape. In so far a business being able to get an Earthquake Insurance policy – I wont touch that one for now.

In regards to the following statement: “earthquake insurance may be required by law or by mortgage lenders.” – some context here would have been helpful. I really do not know of mortgage lendors requiring this in the United States. [Although I might advocate for it one day.] The country of Turkey does make a earthquake insurance requirement.

Lastly I inquired “How expensive is Earthquake Insurance in California?” and here was the Chatbots response:

“The cost of earthquake insurance in California can vary widely depending on a number of factors, including the location, age, and construction of the property, as well as the level of coverage and the insurance provider.

According to the California Department of Insurance, the average cost of earthquake insurance in California is around $800 to $1,000 per year for a typical homeowner’s policy with a 10% to 15% deductible. However, premiums can be significantly higher for properties located in high-risk areas or for properties with unique features, such as a large swimming pool or extensive landscaping.

The cost of earthquake insurance can also vary depending on the insurance provider. It is important to shop around and compare quotes from multiple insurance companies to find the best coverage at the most affordable price.

It is also worth noting that many insurance companies may require an inspection of the property before providing earthquake insurance coverage. This inspection can help identify potential hazards or weaknesses in the building that could increase the risk of earthquake damage, and may impact the cost of coverage.

Overall, earthquake insurance can be a valuable investment for homeowners in California, particularly those in areas that are at high risk for earthquakes. It is important to carefully consider the risks and costs associated with earthquakes, and to work with a trusted insurance provider to find the coverage that best meets your needs and budget.”

Now in this question – I asked a far far more specific question and I feel that it mostly just failed on this response: “$800 to $1,000” based on what year? My professional experience says that this is a pretty dated number. A certain article on Forbes puts that average number at $738.

“Many insurance companies may require an inspection of the property before providing earthquake insurance coverage.” I really do not feel that this statement is correct. Most earthquake providers do a post bind inspection, not a pre bind inspection. Some won’t inspect your property at all.

Reminder Note: The following article you read contains inaccuracies. Please do not make any insurance decisions based on this article. This article is used soley for the purposes of warning consumers to view insurance articles online with increased scepticism.

Now it should be noted that I did not flag all of the problems on here- there are too many. Many statements such as earthquakes “can strike without warning…” are funnier than they are wrong. I know that we have the new earthquake early warning system on the west coast, but when was the last major quake that gave us a warning? [And yes I realize that aftershocks may come with a warning.] It misses finer insurance points, such as Sublimits, Extended Rebuild Endorsements, Rebuild Estimates, Loss of Use, and Financial Strength Ratings. It cites few if any specific examples. It metions that you should read the policy details yet fails to go into any. It notes “large swimming pool or extensive landscaping” yet fails to explain how limited quake policies are in terms of actually covering them. Of course you can make the argument that – that is [I guess] the editor’s job. But even wtih a great editor, I found much of this information required me to spend more time on researching false statements than it saved me in writing actual true information.

AI just does not seem to be ready for this – but perhaps someday, soon. I am not writing this to hammer on Artificial Intelligence. I am sure if you asked the programmers they would be amongst the first to tell us that these tools are not ready to write deep risk management articles. However wily bloggers will be using them just this type of purpose now. So be ready. Be on the lookout. Even good writers may end up citing bad work. Gosh – will someone now cite this AI’s statement about the CEA being founded over a hundred years ago? I sure hope not. – DO NOT CITE THIS ARTICLE about Insurance – please!

So What is the Moral of this story here: Be careful what you read online right now. If other less careful bloggers are writing about insurance based on these AI tools – I would expect a lot of problems. Always read the actual policy, not some AI interpretation of it. Take a bloggers statements – mine included -with a grain of salt. Do your own research and speak with lots of agents.

Update 2023 July:

A recent article makes light of the fact that more and more articles are indeed being written by AI technology. The Wall Street Journal Article: AI Junk is Starting to Pollute the Internet states the “company NewsGuard found 49 fake news websites that were using AI to generate content.” Additionally “Online publishers are inundated with useless article pitches as website using AI-generate content multiply.”

All I can say is “Wow” – be careful believing what you read.