If a nuclear nightmare like the one in Japan happened in your community, don't count on your homeowner's insurance policy to help you. Standard homeowner's policies in the United States don't cover radiation damage caused by an accident at a commercial nuclear reactor.
Doug Griffith, a spokesman for State Farm, says radiation damage and cleanup couldn't be covered by homeowner's insurance because “the potential loss would far exceed any insurer’s financial capacity to handle such a catastrophic loss.”
Tully Lehman, a spokesman for the Insurance Information Network of California, says radiation-related insurance claims for property damage and injuries are excluded under the federal Price-Anderson Act.
In part, the federal law was designed to encourage investment in nuclear power by capping the amount of liability a commercial nuclear plant would face if a disaster occurred. The law, which was enacted in 1957, does provide a way to compensate victims of a nuclear accident at a commercial nuclear power plant, however.
Eligible claims would cover such things as:
• Property damage or loss.
• Living expenses for temporary housing.
The law established an industry-supplied pool of money to cover claims if you or your home is affected by radiation exposure from a commercial nuclear plant. The U.S. Nuclear Regulatory Commission says the fund contains nearly $13 billion -- an amount that some critics have complained falls well short of the potential costs of a major nuclear accident.
Each year, owners of nuclear plants pay for $375 million in insurance coverage for every nuclear reactor they have. That money comes in the form of insurance premiums paid to American Nuclear Insurers, the only company that underwrites nuclear insurance in the United States, according to Lehman. The average annual premium for a single-reactor plant is $400,000.
"Utilities -- not the public or the federal government -- pay for this insurance. Price-Anderson is not a subsidy," according to the Nuclear Energy Institute.
The institute explains that the no-fault insurance kicks in when the Nuclear Regulatory Commission declares an “extraordinary nuclear occurrence.” Experts point out that nuclear accidents are extremely rare in the United States.
In a 2004 report, the nonprofit consumer watchdog group Public Citizen called Price-Anderson "a crutch for nuclear energy."
"The legislation was intended first of all to bolster investor confidence, whereas victim compensation is secondary," Public Citizen said. "Price-Anderson establishes only phantom insurance for the public, then provides a real bailout mechanism for the nuclear energy industry by reducing its need to pay for insurance, subsidizing the industry at the taxpayers' expense."
The nuclear insurance fund has been tapped in the past for one major disaster -- the Three Mile Island nuclear accident, which happened in 1979 in Pennsylvania. That accident triggered $71 million in claims and litigation costs, according to the Nuclear Regulatory Commission.
Right after Three Mile Island, insurance adjusters advanced money to evacuated families to pay living expenses, according to the Insurance Information Institute. Adjusters also reimbursed more than 600 individuals and families for lost wages.
If you found yourself in a catastrophe like Three Mile Island, radiation could enter a home in gas or aerosol form, according to Michael Allen, a nuclear engineer who is dean of the College of Graduate Studies at Middle Tennessee State University.
“The gases and aerosols that enter homes through the HVAC systems or the tiniest cracks in door or window seals can be cleaned up by trained professionals,” Allen says.
More than 100 nuclear power plants operate across the country. Nuclear energy supplies 20 percent of U.S. power needs, according to the Nuclear Energy Institute. Illinois has more nuclear reactors (11) than any other state, followed by Pennsylvania (nine).