Nuclear insurance is insurance carried by companies which work with nuclear reactors, primarily utilities which generate power with the use of a reactor, to protect them from liability claims in the event of a nuclear incident. In the United States, utilities are provided to purchase and maintain nuclear insurance policies under the Price-Anderson Act of 1957, which was signed into law by President Eisenhower. This specialty insurance product is only available from certain insurance companies.
When a company purchases nuclear insurance, it usually takes out a policy on a specific reactor. In nations with laws mandating insurance coverage such as the United States, there are usually minimum policy amounts in addition to maximum possible payouts which are designed to ensure that the policy will be adequate in the event of a major incident without beggaring the insurance company providing the coverage. Nuclear insurance is no-fault insurance, although the circumstances under which a payout can occur will vary.
In the United States, a pool of insurance companies known as American Nuclear Insurers (ANI) has created a fund to cover nuclear incidents which was estimated to hold around 10 billion dollars (USD) in 2009. A catastrophic nuclear incident in a major urban area could easily trigger a huge number of very expensive liability claims which would be covered by this pool. Just for reference, the Three Mile Island accident in 1979 generated liability claims in the amount of roughly $220,500,000 USD in 2009 dollars.
One difference between nuclear insurance and coverage to protect utilities from other types of liability claims related to disasters is that the utilities bear the expense, not the government or the taxpayers. In other cases, utilities may carry some insurance coverage, but the government would step in with assistance in the event of a catastrophe such as the failure of a hydroelectric dam. Nuclear insurance provides a similar level of coverage at no cost to the public, aside from the costs which the utility passes on to users of its energy.
As one might imagine, nuclear liability insurance policies tend to be very pricey. Insurance companies willing to take on the risk need access to substantial capital and very skilled underwriters who create policies which are customized to the nuclear industry. Failure to maintain a nuclear insurance policy on the part of a utility can result in fines and other penalties from the government until the situation is corrected.
