NU Online News Service, July 16, 2:44 p.m.EDT

A story last week that Nationwide would not cover claims fromfracking has created some confusion and should never have been astory in the first place, says Robert Hartwig, president of theInsurance Information Institute.

Hartwig says that the widely circulated story, that NationwideInsurance is the first carrier to say it would not cover claimsfrom fracking, led to some confusion among reporters covering theenergy industry, forcing the carrier to clarify what has been alongstanding policy among insurers.

Last week, a memo, attributed to Nationwide, was posted onseveral New York environmental websites opposed to expansion offracking mining into the state.

Fracking is the injection of high-pressure water intounderground shale for the purpose of releasing oil and gas trappedin the rock.

The practice is blamed for contaminating ground water andcausing shifts in the earth creating earthquakes in some areas.

In its statement explaining the memo, Nationwidesays that gas and oil drilling has been going on for years andfracking is just another variation of that business.

The company says it has not changed its policies or guidelinesin regard to the business, adding that it has never covered lossesrelated to the gas and oil drilling.

Hartwig says ground-water contamination is not covered becauseof 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 incondition.

Christine Barlow, associate editor of FC&S Online, adivision of Summit Business Media, which also owns NationalUnderwriter and PC360, agrees that pollution coverage istypically excluded under property policies.

As far as damage from ground movement, anyone with earthquakeinsurance would have coverage since the policy does not define whatcauses the earthquake, only the movement of ground by the shiftingof 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 tosue the company doing the work. “That's why they have liabilityinsurance.”