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San Bruno Pipeline Explosion Raises Questions About Insurance Coverage

In the wake of the San Bruno, California pipeline explosion last week, the utility set aside about $100 million to help the victims. Whether they distribute that money depends largely on the results of the investigation into what caused the blast. If the company is not at fault, the people who were injured, the people who lost their homes, and the people who lost their loved ones will likely not see any of that money. Instead, they will rely on their insurance carriers. And industry insiders from Florida to Washington State will be following the story.

The full extent of the damage is not yet known. While the immediate damage was catastrophic, the fire isn't out yet. Reminiscent of 9/11, the site is still dotted with "hot spots," and officials are treating it as a crime scene. Officials report that as many as 170 homes were damaged or destroyed, and an untold number of cars and other personal property were lost.

Insurance industry representatives estimate that the accident will cost tens of millions of dollars in insured losses. It's hard to come up with a smaller range for the estimate, because this was such an unusual incident.

This fire caused extensive damage very quickly, and insurance commentators have hardly anything to compare it with. Wildfires, for example, move quickly, but they start small and grow over time. The industry also (sadly) has more experience - and more recent experience - with covering damages from wildfires.

In our next post, we will address how the victims of the explosion - or any disaster - can prepare for their claims.

Resource: The Bay Citizen "After Evacuation, Insurance Is Next Task" 9/10/10

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