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Is Damage Caused by Fracking Covered by Insurance Policies?

fracking in blackpool

What is Fracking?

Fracking, short for hydraulic fracturing, is the process of drilling into the rock and pumping water at high pressure both vertically and along horizontal planes in the rock in order to release natural gas and oil from the shale rock. This has become common practice in the UK and the dangers of this are far from undocumented, particularly in areas where new sites have been identified such as Blackpool. Fracking often leads to earth tremors due to high pressure being placed on the bed rock during extraction of gas or oil. If the strength of these tremors is high on the Richter Magnitude Scale, then damage could be catastrophic to buildings and people situated close to the epicentre.

A knock-on effect of this, is higher insurance premiums are now beginning to emerge across areas which may be at risk of tremors or earthquakes caused by fracking. What customers have been asking their insurers is: “Am I covered for damage caused by fracking?” And, the answer is impossible to answer for every circumstance, it would come down to the wording of the insurance policy itself. If your insurance is affected by fracking, it would be wise to assess your policy, to the letter, and determine whether you are in fact covered.

Guidelines on Fracking

Guidelines stipulate that fracking companies must suspend work for 18 hours when they trigger earthquakes of a magnitude of 0.5 or above. There is evidence to suggest this does not always occur and on untested rockbeds, it is difficult to quantify how bad tremors could become. Recently, private company Cuadrilla was forced to suspend all fracking due to a series of earthquakes over the bank holiday weekend were as high as 2.9 on the Richter Scale.

Underwriters when calculating a premium will rely upon various sources of information when determining the risked faced under a prospective policies they issue. It would seem reasonable that insurers would evaluate postcodes when contemplating the introduction of a ‘fracking exclusion clause’ in their policy. However, this does not seem to be the case of yet.

From a legal perspective, the American courts have seen a lot more discussion and court action in relation to fracking related claims. But, with the rise of fracking in the UK, claims could become common practice in the not so near future. The events of the bank holiday weekend prompted a response from Boris Johnson’s government, which prior to the incident appeared to be relaxing the regulation of fracking. As it is reasonably foreseeable that such tremors could result in property damage to buildings and structures on the surface, it could be argued that private companies such as Cuardilla in Blackpool are indeed responsible for damage and for inflated insurance premiums.

If you receive any notification of a restriction in your cover, you may contact us directly to discuss your concerns. We also welcome enquiries from those that have sustained damage to their property and/or those who have been injured by fracking related activity.

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