How Fracking Impacts Homeowners Insurance?

Fracking Terminology

Hydraulic fracturing, sometimes known as "fracking," is injecting a solution of water and chemicals into underground shale formations to extract natural gas. Shale is a rocky substance that normally runs between 3 and 8 kilometers beneath the earth's surface.

A drilling rig, or derrick, is used in fracking to drill vertically past the water table. Cement is then poured to seal the drill shaft so groundwater cannot enter. After that, drilling will keep going until the shale formation is broken. After hundreds of feet of horizontal drilling, a perforating gun is fired into the shaft. The subsequent small explosions from the gun crack the shale and concrete.

The contentious fracking cocktail is injected into the well, where it escapes through the explosion points and settles into the shale. While the water rises to the surface, the shale fissures widen and deepen. The outcome is the release of natural gas, which has been trapped for thousands of years, into the pipes, where it is collected at the surface. The fracking cocktail's sand grains keep shale fractures open so gas can continue flowing out.

How Fracking Puts Homeowners in Danger

Most homeowners rely on insurance plans to shield them from litigation and liability for property damage, but they are frequently unprepared for how their insurers may view fracking.

If residents agree to lease their land for fracking, live close to a fracking site, or experience indirect effects of fracking, such as water pollution and earthquake activity, they may suffer negative effects.

Since they are using their land for commercial purposes, homeowners who consent to fracking operations on their property will probably not be covered by their insurance. Other property owners have the right to sue them for any unfavorable effects of fracking, such as water contamination, damage to nearby properties, or damage brought on by earthquakes and well-blowouts that could unleash millions of gallons of poisonous material.

Even if they have no connection to the drilling company, homeowners who live close to fracking sites could still be in danger. Residents of Dimock, Pennsylvania, rebelled against Cabot Oil and Gas, the fracking business, after they were exposed to high levels of methane contamination in their drinking water. After the water pollution, several families could recover money through a lawsuit against the oil firm. Still, the battle was challenging, and some families weren't happy with the court-ordered restitution.

The spectrum of potential effects may be larger than most Americans are aware of, and they may even be felt by homeowners who live far from the actual fracking site. Recent FracTracker results indicate that at least 21 states, from upstate New York to Montana and from Virginia to California, are being impacted by fracking. Furthermore, according to The Wall Street Journal, 1 in 20 Americans reside less than a mile from a fracking site.

How Fracking Is Handled By Insurance

In terms of homes, liability, pollution, and unintended repercussions like earthquakes are the main effects of fracking. Unexpectedly, insurance firms are unlikely to offer particular coverage choices for fracking in their standard plans.

Nationwide Insurance faced criticism in 2012 after a leaked document stated that it would not pay for harm from fracking. However, they are not the only insurers who do not offer this kind of coverage. Most personal or business insurance policies typically do not cover losses associated with fracking, especially since many policyholders are unaware of how to inquire about fracking coverage from their insurers.

By acquiring an umbrella liability insurance policy that extends liability coverage from claims made against their house insurance policies, policyholders can take preventative action against fracking damage. Homeowners should choose the maximum liability limits their insurer provides if they are worried about fracking-related damages. Additionally, policyholders should ensure that there are no pollution exclusions in their insurance contracts because they may need to consider the necessity of an environmental cleanup. Greater earthquake activity may also result from fracking, but fortunately, earthquake insurance is a simple policy add-on in most jurisdictions.

How to Obtain Fracking Insurance

• Discuss umbrella insurance with your insurance representative.
• Check your insurance for ambiguous exclusions related to pollution or water contamination.
• If you don't already have it, purchase earthquake insurance.

What To Do If Fracking Damages Your Home

There are steps you can take to seek compensation if your home has been harmed:

• Get a lawyer: when in doubt, speak with experts. Experienced insurance lawyers can help you immensely with your insurance claim by obtaining experts and reports.

• Look over your policy: If you have an earthquake, pollution, and umbrella insurance, you might be protected against losses from those sources.

• Make a claim: Initiate a formal request for reimbursement by working with your insurance agent. You will be permitted to submit a claim if your harm is confirmed as a covered policy occurrence.

• Find out who is responsible for damages if your home is harmed and you have leased your land to a drilling business or live close to a fracking site. You might need to take the drilling business to court.