Insurance companies are reeling from the possible cost of the disaster in Japan. It will be weeks before the entirety of the damages can be put into any kind of perspective to be tallied. It isn’t just the property damage and the economic loss; the lives that were lost will also be a factor. Another aspect of this disaster is the nuclear contamination from damaged reactors. Most traditional policies exclude coverage for nuclear accidents.
There is more to assessing damage than people might realize. You have to determine what was lost, how it was lost and what it will take to replace it. It wasn’t one single incident that happened; it was a series of incidents. When multiple causes are involved, you have to determine what caused the initial damage.
The reality of this is, there is still damage occurring. The biggest threat at this point is the on going leakage from the nuclear reactors. Most of the regular insurance companies won’t be paying any claims associated with damages or health issues caused by the reactor explosions or leaking radiation.
In the United States, the Price-Anderson Act was made a law in 1957. This was developed solely to cover any damages resulting from an accident at a commercial nuclear plant. All operators of nuclear facilities are required to have some form of this coverage.
The coverage makes the operators of the plant strictly responsible for damages, death, illness and injury resulting from a nuclear plant accident. Because of these provisions, most people would be covered for loss by the facility’s insurance. The International Atomic Energy Association, and member states of international treaties covering nuclear accidents, have come together to offer all available means of support, and technical assistance to Japan.
For the regular insurers, the cost of all losses and damage is being guesstimated in the hundreds of billions of dollars; but the actual numbers won’t be available for weeks or months to come. The impact this will have on the nuclear plants and their coverage, is yet to be known.
