Does Earthquake Insurance Exclude Fracking?

Feb. 03--If buying earthquake insurance, read your policy carefully.

At least one policy endorsement obtained by The News showed that earthquakes caused by hydraulic fracturing, or "fracking," were excluded from earthquake coverage.

It could mean potential litigation if a claim was ever filed and denied by the company, Kansas' former insurance commissioner noted.

While hydraulic fracturing isn't suspected as the cause of Kansas quakes, state geologists have linked southern Kansas' earthquakes to the saltwater injection wells used by oil companies. The hydraulic fracturing process creates more wastewater, which, in turn, is injected into the Mississippian formation.

The endorsement also notes that "sequestration of carbon dioxide or any other gas, solid or liquid" is also among the exclusions listed. It's unclear if that definition could include wastewater disposal.

Other companies, however, said they had not heard of that exclusion in their own policies.

Mike Osner, with Kingman Insurance Agency in Kingman, said some policies have exclusions for damage to brick veneer, but he had not heard about damage caused by fracking being excluded from coverage.

"Fracking? Not to my knowledge," said Hutchinson State Farm agent Cris Corey about what his policies and endorsements exclude. He did note that it may cost extra to cover a home or business' brick veneer.

Former Insurance Commissioner Sally Praeger said in December that she, too, was unaware whether hydraulic fracturing could be an exclusion.

"I would have to check," she said of whether some companies are excluding fracking. "This is a fairly new phenomenon. I would imagine as policies get filed, they are adding that language."

However, she said, "that should not be a reason not to pay the earthquake claim."

It could come down to a court case, but Praeger said she didn't think such exclusions could be enforceable.

"It is almost kind of amusing -- the industry is putting those exclusions in while the oil industry still is saying this isn't causing increased earthquake activity," she said.

Wes Higgs, who has an American Family Insurance agency in Anthony, said hydraulic fracturing was excluded in the company's earthquake endorsement.

Higgs said customers should read their policies and check with agents about coverages and exclusions.

"Some will cover masonry veneer but not masonry construction unless they have been built or upgraded to meet earthquake-resistant building codes," Higgs said. "The only reliable verification of earthquake-resistant construction is a written statement, with the appropriate seal, from a registered professional engineer or architect."

___

(c)2015 The Hutchinson News (Hutchinson, Kan.)

Visit The Hutchinson News (Hutchinson, Kan.) at www.hutchnews.com

Distributed by Tribune Content Agency, LLC