NU Online News Service, July 16, 2:44 p.m. EDT
A story last week that Nationwide would not cover claims from fracking has created some confusion and should never have been a story in the first place, says Robert Hartwig, president of the Insurance Information Institute.
Hartwig says that the widely circulated story, that Nationwide Insurance is the first carrier to say it would not cover claims from fracking, led to some confusion among reporters covering the energy industry, forcing the carrier to clarify what has been a longstanding policy among insurers.
Last week, a memo, attributed to Nationwide, was posted on several New York environmental websites opposed to expansion of fracking mining into the state.
Fracking is the injection of high-pressure water into underground shale for the purpose of releasing oil and gas trapped in the rock.
The practice is blamed for contaminating ground water and causing shifts in the earth creating earthquakes in some areas.
In its statement explaining the memo, Nationwide says that gas and oil drilling has been going on for years and fracking is just another variation of that business.
The company says it has not changed its policies or guidelines in regard to the business, adding that it has never covered losses related to the gas and oil drilling.
Hartwig says ground-water contamination is not covered because of pollution exclusions in a homeowners policy.
As far as damage to the home from shifting earth, homeowners' and commercial property policies do not cover difference in condition.
Christine Barlow, associate editor of FC&S Online, a division of Summit Business Media, which also owns National Underwriter and PC360, agrees that pollution coverage is typically excluded under property policies.
As far as damage from ground movement, anyone with earthquake insurance would have coverage since the policy does not define what causes the earthquake, only the movement of ground by the shifting of tectonic plates. Any movement other than earthquake is excluded, Barlow says.
Hartwig says that if the fracking does cause damage, the property owner’s recourse is to sue the company doing the work. “That’s why they have liability insurance.”