The following exclusion applies to the Businessowners endorsements, BU 08 20 (08 15), New Jersey, and BU 08 10 (10 15) Pennsylvania. The exclusions applicable to the Commercial Umbrella endorsements are MCL 790 (08 15) and MCL 780 (10 15), and the Commercial Property, Commercial Liability, Contractors, House of Worship, and Garage endorsements are MCM 820 (08 15) and MCM 810 (10 15), all contain similar wording.

A. The following exclusion is added to PART I:

Fracking

We do not provide insurance for any loss or damage arising out of or resulting from fracking. This includes, but is not limited to: any earthquake, earth movement or sinkhole collapse.

However, if loss resulting from fire or explosion, or theft (to the extent otherwise insured by this policy) ensues, we insure such resulting loss.

Analysis

MSO makes clear that property damage and loss resulting from fracking—including resultant earthquake, earth movement, and sinkhole collapse loss or damage—is not covered. However, ensuing fire, explosion, or theft as a result of fracking are covered.

B. The following exclusion is added to PART II:

Fracking

We do not insure bodily injury, property damage, advertising injury, personal injury or medical payments caused by, or resulting from fracking. This includes any damages, expenses, liability, or loss, aggravated by, consisting of, or resulting from any of the following:

1. Earthquake, earth movement, or sinkhole collapse;
2. The actual, alleged, or threatened discharge, dispersal, emission, escape, flowing, leakage, migration, release, or seepage of fracking fluids, pollutants or other similar forms of environmental damage into land, any body of water, above ground or underground water, or wells;
3. Contamination resulting in any virus or other pathological agent that causes disease or illness in humans, animals, birds, or other creatures;
4. The leasing or renting of your premises for the purpose of fracking;
5. The removal, storage or transportation of waste water or other chemicals from the fracking drilling site;
6. The extraction of fracking fluids or other pollutants caused by fracking from land or water;
7. The removal, replacement, or restoration of land or water that is polluted with fracking fluids or other pollutants caused by fracking.

C. We do not insure under this policy any cost, expense, liability, or loss arising out of any of the following:

1. Any demand, directive, order, or request that any insured or others clean up, contain, detoxify, monitor, neutralize, remove, test for, or treat, or in any way assess the harmful effects associated with the process of fracking; or
2. Any claim or suit by, or on behalf of, any governmental authority for damages or reimbursement because of cleaning up, containing, detoxifying, monitoring, neutralizing, removing, testing for, treating, or in any way assess the harmful effects associated with the process of fracking.

Analysis

Liability losses associated with fracking are not covered. Thus, the property portion of the exclusion, earthquake, earth movement, and sinkhole collapse-related losses are excluded.

Fracking is accomplished by injecting water and fracturing fluids in a rock layer at high pressure and volume to artificially propagate fractures in the rock layer. The fractures create passages for gas and liquids to flow. The fracking fluids, along with other contaminants and pollutants, can be released in various bodies of water (above ground or below ground), wells, and land. Losses caused when this happens are not covered. Costs associated with removing and storing fracking fluids and related pollutants and contaminants from land or water also are not covered. Likewise, loss, costs, expenses, or liability arising from an order, demand, request, or directive to address the harmful effects associated with fracking are not covered; nor are the costs associated with a claim or suit by a government entity for reimbursement of damages for assessing the harmful effects of fracking.

Often fracking is performed on land leased by drilling companies from property owners. This exclusion applies to any loss or damage that results from the insured renting or leasing premises for fracking.

COMMON GLOSSARY

The following definition is added:

Fracking

Fracking means any process of drilling and injecting chemicals, gas, propane gel, sand, water, or other fluids or substances at high pressure into the ground to break up shale rocks from below the earth's surface in order to release natural gas and oil from below the earth's surface.

Analysis

"Fracking" is a defined term in the endorsement. The definition is broad enough to encompass any process of drilling and injecting a variety of substances into the ground with the ultimate purpose of releasing natural gas and oil.