The issue of whether hydraulic fracturing or “fracking” causes earthquakes has first-party insurance implications because policies typically exclude damage from tremors attributable to man-made causes as opposed to purely unnatural ones. We’ve discussed the issue in two recent posts after Insurance Commissioners in Oklahoma and Pennsylvania publicly warned carriers against denying earthquake claims on the basis that they were attributable to oil and gas drilling. The jury is still out on the issue, but scientific evidence linking fracking to the tremors is accumulating rapidly.
At the present time, Oklahoma is at the “sharp end of the spear” with respect to this issue because the state experienced fully 567 quakes of Magnitude 3.0 or greater in 2014. That is the more than in the proceeding 30 years combined, and Oklahoma is on track to see fully 1100 such earthquakes n 2015! When he released his bulletin in March, the state’s Insurance Commissioner stated that his office would assume that the state’s quakes were not man-made “[u]ntil a legal ruling is made.” It now appears that just such a ruling may well be coming in the Sooner State.
Two days ago in Ladra v. The New Dominion, LLC, 2015 OK 53, 2015 WL 3982748, 2015 Okla. LEXIS 71 (Okla., Jun. 30, 2015), a unanimous state Supreme Court cleared the way for a lawsuit over causation to go forward. The plaintiff contends that disposal of the massive amounts of wastewater from fracking by injection into deep wells caused a serious 2011 earthquake. That matter, as well as other litigation that the decision will inevitably spawn, will be closely followed by both the energy industry and by fracking opponents, and it should be monitored by insurers as well given what the court called the “dramatic increase in the frequency and severity of earthquakes” in Oklahoma and other frack-high jurisdictions and the consequent ramping-up of resulting insurance claims. Read more ›
The policyholder owned a home in St. Charles that sustained siding damage in a hailstorm in April 2012. The damage was confined to the home’s northern side, and the carrier paid the actual cash value for replacement of all of the siding on that portion of the building. Because the original siding was no longer manufactured, however, the insured contended that she was entitled to recover for replacing the siding on the entire structure, and she brought suit after the insurer refused. 
The policyholder operated a welding business in Uniondale, and the company stored scrap metal in an ungated yard on the property. As summarized by the court, the undisputed facts were as follows:
Washington State has long been a jurisdiction with no judicial pronouncement as to the meaning of the term “collapse” in a property insurance policy, but that changed last Thursday when the state’s Supreme Court issued its decision in 
The policyholder had contracted for the construction for a parking garage adjacent to a performing arts center in Kansas City, and the project included the installation of a 50’ high concrete retaining wall between the structure and an adjacent limestone rock face. The original design called for up to 18” of concrete slurry to be poured between the wall and the limestone embankment, but, at the general contractor’s insistence, it was modified to permit up to 36” of the fill material to be installed. While the slurry was being pumped in place, the wall cracked and failed, and it was uncontested that the change to 36” of fill was a design defect.
The policyholders owned a home with a detached garage in Alpine, Arizona. Beginning on May 29, 2011, eastern parts of the state and western New Mexico were devastated by a massive blaze known as the Wallow Fire – we published a post about an Arizona district court decision concerning business interruption loss that stemmed from that conflagration last month. The fire consumed the detached garage and all of the vegetation on the nearby hillside, but it did not reach the house. On August 6, 2011, however, one month after the Wallow Fire had been contained, there was a mudslide on the hillside, and mud and runoff water from flooding destroyed the home.
Instead of contending that the “requirements in case of loss” language mandated the tapes’ production, of course, the insurer should have sought them through regular discovery and moved to compel if they weren’t forthcoming. It is hard to see how the policyholder could have resisted that motion given her allegations of bad faith.
Early last month a federal court in Indianapolis barred a policyholder from seeking the claims and underwriting files of the defendant carrier’s reinsurer in 
The insured owned a house and secured a homeowners policy that also extended coverage to his mortgagee. The mortgage company instituted foreclosure proceedings and the policyholder vacated the dwelling, but only after removing fixtures and damaging property to the tune of $246,025. The mortgagee’s subsequent insurance claim was denied, and litigation ensued.
The Keystone State has not seen the dramatic uptick in earthquake activity that has shattered both nerves and property in Oklahoma in recent years. Because of the hydrocarbon-rich Marcellus Shale formation, however, it remains a jurisdiction with more oil and gas drilling than all but a handful of other states, and many homeowners have purchased earthquake endorsements in view of the widely-publicized rise in seismic activity in many such places. 