Earthquakes are becoming more common in Oklahoma as a result of wastewater disposal wells, and one company is in the thick of a legal battle with its insurance company.
Plaintiffs filed five lawsuits in Oklahoma state and federal courts against Oklahoma oil and gas company New Dominion LLC in January and February. The suits alleged the company’s use of hydraulic fracturing and injection well operations caused or contributed to an increase in earthquakes, according to court records filed.
A 5.7 magnitude earthquake recorded in Prague, Okla., in 2011 caused damage and injury to person and property.
Records show New Dominion, a natural resources producer, holds a pollution liability insurance policy through Lloyd’s of London, an insurance marketplace. Under the policy, Lloyd’s agrees to pay for damages from claims for bodily injury or property damage from pollution conditions at, on, under or migrating from New Dominion’s sites, according to court documents.
New Dominion is seeking to get the damages covered under the pollution policy with Lloyd’s, according to court records.
New Dominion filed a lawsuit against Lloyd’s in June in Tulsa County District Court to cover the damages.
Recently, Lloyd’s won a decision to have the case tried in New York, rather than in Oklahoma. The policy in question includes a selection clause that states in the event of litigation, arbitration or dispute resolution, Lloyd’s and New Dominion agree that laws of New York will apply and any litigation, arbitration or other disputes will take place in New York, according to the court documents.
A federal judge in New York decided in September to try the case in New York.
Oklahoma Insurance Department Commissioner John Doak said this lawsuit shouldn’t affect Oklahoma earthquake policies.
“Regarding commercial liability insurance, policies covering liability rising from induced quakes could become less available and more costly for the oil and gas industry,” he said. “In regard to earthquake insurance, I doubt the Lloyd’s case will have any direct impact on that coverage in Oklahoma.”