In February of 2014, an article published in the Turner Radio Network site (now defunct, but still available in the Internet Archive) made a stir, claiming that insurance companies were sending letters to policy holders about a new “Nuclear Energy Liability Exclusion” being added to their policies. A sample letter is quoted below:
Thank you for choosing Travelers. We are providing advance notice of changes affecting your renewal policy or notification of renewal premium. Please consult Travelers Service Center for guidance in reviewing the information contained in this notice.
Your renewal policy will provide changes in coverage because of underwriting judgment based on an evaluation of your
individual risk exposures and/or loss history.
The following is changed on your renewal:
Coverage Change Details
IL 00 21 09 08 NUCLEAR ENERGY LIABILITY EXCLUSION ENDORSEMENT FORM HAS BEEN ADDED TO YOUR POLICY
But here’s the thing: Nuclear liability exclusions have been STANDARD in insurance policies since the late 1950’s
Apparently others informed the author of this, citing 1957’s Price Anderson Act, limiting the liability of insurance companies in the event of a nuclear accident.
The author wemt on to refute this argument on the following grounds:
The Price-Anderson Nuclear Industries Indemnity Act (commonly called the Price-Anderson Act) is a United States federal law, first passed in 1957 and since renewed several times, which governs liability-related issues for all non-military nuclear facilities constructed in the United States before 2026. The main purpose of the Act is to partially indemnify the nuclear industry against liability claims arising from nuclear incidents while still ensuring compensation coverage for the general public. The Act establishes a no fault insurance-type system in which the first approximately $12.6 billion (as of 2011) is industry-funded as described in the Act. Any claims above the $12.6 billion would be covered by a Congressional mandate to retroactively increase nuclear utility liability or would be covered by the federal government.
This is all true, however he neglects to mention one important fact.
Subsequent to the Price Anderson Act, insurance companies around the world implemented a policy never to insure against nuclear incidents becase the risk was too great. Hence, the Nuclear Exclusion clauses.
The history of nuclear insurance coverage is covered clearly and in detail in this article by Gordon Edwards PhD, President of the Canadian Coalition for Nuclear Responsibility. (Mr. Edwards goes on to recommend some major changes to Canada’s own Nuclear Liability Act.)
So why did policy holders get that letter? Since all accounts we’ve seen seem to refer to Traveler’s Insurance, we’re speculating that there may have been some oversight on Traveler’s part in which the customary exclusion clause was not included when certain policies were originally issued.
It’s worth mentioning that operators of nuclear facilities in the US can (and are generally required to) purchase insurance through the pool of insurers known as the American Nuclear Insurers (ANI). For anyone interested in reading more about this aspect of nuclear insurance, this article on the web site of Pilsbury Law has a good discussion of nuclear insurance coverage as it applies to corporate entities and nuclear facilities. It also presents some recent decisions which have challenged former interpretations of this coverage, in particular “pollution exclusions.”