Will homeowners insurance cover damage from a nuclear explosion?
The simple answer is: no, a homeowners insurance policy will not cover nuclear explosion because it is explicitly excluded by the wording of the policy. This type of peril does not meet the underwriting criteria for insurability for a few reasons:
- Deliberate acts of violence are excluded. Nuclear explosions are unlikely to ever occur again; however, if one were to occur, it would be the result of some deliberate act of violence such as war, terrorism, or the actions of an enemy of the state. These types of losses are typically legislated exclusions in the Insurance Act that applies in your jurisdiction.
- This type of loss is considered to be commercially uninsurable. Because of the potential for massive losses, if even one such event were to occur (whether deliberately or accidentally), the losses would be such that it would not be profitable for an insurance company to underwrite such a risk (learn more in A Look at Uninsurable Risk). This leads into our next point.
- There is the potential for catastrophic loss with this type of business. What this means is that if a nuclear explosion were to occur, the damages would be so great that it would be impossible for the insurance company to pay out claims without going bankrupt. While most countries have an "insurer of last resort" (for example, the Property and Casualty Insurance Compensation Corporation in Canada) that would pay out claims if an insurance company fails, it is unlikely that even they would be able to pay out such amounts. As a result, homeowner insurance companies will, unsurprisingly, usually decline to underwrite nuclear explosion damage.
While there is no nuclear explosion coverage on your homeowners insurance policy, most nuclear power plants do carry their own specialized insurance policies. In the event of an accident, they would most likely pay out liability claims if you're affected.
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