Q: I’ve not seen fracking addressed in your column but I understand that doesn’t mean you haven’t! Most homeowners do not know their home insurance does not cover fracking, even if they have earthquake coverage because it would be “man made” earthquake/earth movement. Can you please comment on how homeowners can protect themselves?
A: Thanks for your comment. Homeowners’ insurance policies have been made “easier” to read in the last dozen or so years but the terms and issues involved can still be complicated. Most homeowners know that if their home burns down, they can expect that their insurance company will cover them in one way or another. As with most issues that have to do with insurance, there are always limitations.
Usually, homeowners’ insurance policies start by telling a homeowner what property is covered under the policy. If you purchased the policy to cover your home, then your home should be the property covered and, with certain limitations, the personal property you own that is located at the home.
But don’t expect that if you own a boat, car or airplane and those items are stored at your home, that they will be covered under the policy. They typically won’t. When you get through understanding what “property” is and is not covered under the policy, then you need to know under what circumstances that property is covered under your policy.
Under the perils section of your policy, you should see that your insurance company should cover you for fire, lightning, windstorms and hail (with limitations), among others. For example, you might have coverage for volcanic eruptions, but you won’t have coverage from earthquakes, land shock waves or tremors even if they are part of the eruption. While you might have coverage for hurricanes, you won’t have coverage for flooding.
Even when you think you understand the perils that might be covered under your policy, you still need to review the exclusions to the policy. Most earth movement is excluded from most homeowners’ policies, as well as war, and nuclear hazards.
So that’s a very brief rundown of some of the issues, but the issue you raise is what happens when you suffer a loss in your home due to the business activities of others around your home such as a mine, factory, or other business that generates vibration or shock waves.
If you were to review most policies, you might find that most earth movement of all types is excluded from the policy except where the damage is actually caused by a fire or explosion.
When it comes to fracking and other mining activities, your property might sustain damage because of movement in the land caused by those businesses. As the land moves, you could wind up with cracks in your home and some of those cracks could be large and could be costly to repair.
And, we could see how your homeowners’ insurance policy might exclude coverage for that damage. Keep in mind that homeowners’ policies also might exclude other events that occur over time including wood-boring insects. If your home is infested with termites, for example, you might have a total loss, but your insurance company will likely not cover you for the loss and repairs to your home.
You may be able to buy extra coverage for fracking, much in the way you can buy earthquake coverage. While earthquake insurance is extremely expensive (and often has a high deductible) in places like California, it is less expensive in places like Chicago, where the odds of having a damaging earthquake is remote.
You’d have to see what laws have been passed in your state that could protect you from the damage caused to your home by nearby mining or fracking. If the state you live in requires the companies to take adequate action to avoid damage to surrounding properties and they have not, you might have a claim against the mining or fracking company.
Talk to an attorney in your area with experience in dealing with damage caused by mines and other operators of like businesses.