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Nationwide Insurance Announces No Coverage For Fracking Related Damage

Nationwide Mutual Insurance Company announced this week that it won't cover damages that come from fracking, making it the first major insurance company to make such an announcement. Alanna Quillen reports.
MIDLAND -- Nationwide Mutual Insurance Company announced this week that it won't cover damages that come from fracking, making it the first major insurance company to make such an announcement.

And of course, fracking, the gas drilling process that blasts chemical-laced water deep underground, is big business in the Basin. So, how are home owners feeling about it and how is it affecting anyone?

Joe Case, a spokesman with the company, says they haven't changed or cancelled any policies or guidelines.

"Fracking related losses have never been a covered loss under our personal or commercial lines policies," he said.

He says insurance providers need a picture of all risks involved and price the coverage to match all those risks.That's why he says insurance companies have questions marks around the practice of drilling.

"It's really not something that's covered under your standard policy," he said. "That's why we encourage folks who have questions about to make sure that they're not assuming they're covered, and to have a conversation with their insurance agent."

Nationwide's personal and commercial lines insurance policies were not designed to provide coverage for any fracking-related risks.

"The bottom line is to ask for the information and not make assumptions based on rumors and misinformation that tends to get out in the marketplace when you have a heated issue like this," he added.

Bob Wray is a member of the Briarwood Homeowner's Association in Midland. A new well is being planned a quarter mile away from his neighborhood, but he's not worried about this announcement.

"The risk posed to my home by a well being hydraulically fractured, a half or quarter mile away, in my estimation, is zero," he said.

Nationwide says their guideline is that they don't insure the oil and gas business.

"Well, it gets back to the issue of fracking versus living in the oil field," Wray said. "We all moved here, knowing we're in the oil field."

Case said it's hard to tell what the rest of the insurance industry will do.

"It's pretty standard practice across the industry, where you do not see these types of risks related to drilling covered in a standard
Insurance policy," he said.

He added that they've only received a few calls of complaints on the announcement..
   
He encourages people to talk to their agents to understand what coverage is provided, and for additional questions, to seek help of financial and legal specialists to understand the unique nature of the risks associated with oil and gas exploration.
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