I received this question below from an Ohio agent. His concern is Natural Gas Fracking and trying to find out where this would be covered. He endorses mine subsidence to the Ohio policies, where applicable, and this is administered by the Ohio Mine Subsidence Insurance Underwriting Association. He is also trying to determine whether there is any coverage under either the base HO 00 03 policy or if there is coverage if the earthquake endorsement is added to the policy. I would appreciate your thoughts on the matter.

Illinois Subscriber

Let's walk through this. Fracking involves the pumping of water and chemicals underground at high pressure to shatter rock formations and release gas; the practice generates a considerable amount of waste liquid, which is often disposed of by injecting it into deep rock formations where it can lubricate faults. This may make it easier for stressed faults to shift and cause an earthquake.

Under the statute used by the Ohio Mine Subsidence Insurance Underwriters, mine subsidence is defined as "loss caused by the collapse or lateral or vertical movement of structures resulting from the caving in of underground mines, including coal mines, clay mines, limestone mines, and salt mines. "Mine subsidence" does not include loss caused by earthquake, landslide, volcanic eruption, or collapse of strip mines, storm and sewer drains, or rapid transit tunnels". The structure must be in an eligible county in order to be eligible for the coverage. This does not seem to happen with fracking; therefore I would not see fracking as being covered under mine subsidence.

The HO 00 03 excludes earthquake, but does not define it beyond stating that it is excluded as well as subsidence and any other earth movement including earth sinking, rising, or shifting. These causes are excluded whether caused by an act of nature or any other cause. Merriam Webster online defines earthquake as "a shaking or trembling of the earth that is volcanic or tectonic in origin."

The earthquake endorsement HO 04 54 provides coverage for earthquake, but not for any other earth movement. Since a distinction is made in the main policy, any movement other than earthquake such as sinking, rising or shifting would be excluded.

Since fracking can lubricate faults and cause them to slip easier causing an earthquake, then the endorsement provides coverage. There is no specification as to how the earthquake must be caused, whether by natural fault slippages or slippages that have been helped along by man. This is still tectonic movement, the movement of plates of the earth's crust. As long as the movement caused by fracking is an earthquake and not other sinking, rising or shifting, there is coverage.

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