The 1906 San Francisco Earthquake: Biggest Insurance Fraud Ever?

Given that the corrupt city officials at the time downplayed the actual damages and deaths, was the “famous”1906 San Francisco Earthquake the biggest case of insurance fraud ever?


By: Ringo Bones


It all started at 5:13 on the morning of April 18, 1906. The geological forces that shaped the San Andreas Fault for millions of years caused the ground beneath San Francisco to sway. The tremors of that terrible earthquake lasted for only 48 seconds, but – as widely documented at the time of the terrible tragedy – overturned stoves spilled out burning coal and fuel oil as the numerous wooden buildings collapsed. Thus fires were ignited almost simultaneously in a dozen - or so - place and soon much of the city was ablaze. The widespread fires took three days to burn themselves out, destroying more than four square miles of the center of the city. Even though graft indictments were later brought up against Mayor Eugene Schmitz, and political boss Abe Reuf plus the ousting of the board of supervisors in 1907, was the full extent of the insurance fraud – via fraudulent insurance claims of the 1906 San Francisco Earthquake ever documented?

Though archival evidenced has surfaced years later that “hints” the true extent of the corruption and fraud instigated by city officials during the 1906 San Francisco earthquake. It was common knowledge at the time that San Francisco’s mayor and various city officials instigated the “political spin” that would allow the city of San Francisco to recover in an economically and politically expedient way as to attract investors for the rebuilding effort as soon as possible. Evidence of the airbrushing / retouching of press photos of the disaster with the behest of the San Francisco City government surfaced years later. Proof that the 2005 Hurricane Katrina disaster relief fiasco is not the first incidence of ineptitude by the US Government when it comes to handling major natural disasters.

The assigning by San Francisco politicians of the US Military, local law enforcement and the local militia to protect against looting with shoot to kill orders reminiscent of the Hurricane Katrina aftermath is not the only US Government “shenanigans” committed during the aftermath of the 1906 San Francisco earthquake. The local politicians also actively aided their “rich” constituents to falsify building insurance claims via political spin that allowed them to claim for fire damages instead of earthquake damages. Which at the time established insurance providers didn’t yet issue proviso for insurance payouts due to building structural damage via earthquake. Due to the politically and economically expedient way in which San Francisco was rebuilt after the 1906 earthquake, local building planners lowered building standards with the behest of the city government by as much as 50%. Which the original rigid building standards established before the 1906 earthquake was restored only during the latter half of the 1950’s.

The shadow of the government ineptitude and shenanigans committed immediately after the 1906 earthquake still casts a long shadow until this day. San Francisco’s Geological Disclosure Act was made very easy to falsify and manipulate because of the 1906 earthquake. Some property owners – if not most of them – can easily falsify their insurance claims, especially if they are influential enough to have the proverbial “friends in high places”. Which can be a nightmare for insurance claims adjusters, risk assessors, and building inspectors.

Currently, the Geological Disclosure Act governing San Francisco remains largely unenforced. Especially on buildings built on soft sandy soil that are prone to liquefaction during earthquakes. Some parts of San Francisco still have row upon row of wooden buildings that could easily become a fire hazard during earthquakes. Even though a growing number of buildings are already retrofitted to make them earthquake-proof – including the Golden Gate Bridge and the Oakland Bay Bridge. Many buildings around San Francisco are still waiting to be retrofitted to make them more resistant to strong earthquakes.