COALEX REPORT 96

	Coalex Report 96

This is the Office of Surface Mining's library of COALEX Research Reports. COALEX is a database of mining and reclamation information, including the Surface Mining Law and regulations, maintained in LEXIS-NEXIS -- a commercial, on-line research service. These reports have been compiled under a cooperative agreement between the Office of Surface Mining and the Interstate Mining Compact Commission, which represents most U.S. coal producing states. The following report includes an analysis of a specific issue requested by a state regulatory authority with responsibility for carrying out the Surface Mining Law. Copies of the research reports and attachments are available to the public, upon request. For additional information, or to obtain copies of the listed attachments, contact Ron Tarquinio by phone at (202) 208-2882 or by e-mail at rtarquin@osmre.gov.

                   
COALEX STATE INQUIRY REPORT - 96
May 25, 1988

Mike Abbott
Department of Mines, Minerals and Energy
PO Drawer 900
Big Stone Gap, Virginia 24219

TOPIC: MINE SUBSIDENCE INSURANCE (Addendum to STATE INQUIRY REPORT - 67)

SEARCH REQUEST: Identify any states which have implemented mine subsidence insurance
programs.

SEARCH RESULT: Mine subsidence insurance was the topic of STATE INQUIRY REPORT - 67,
which was issued in October, 1986. At that time, five states (Illinois, Kentucky, Ohio,
Pennsylvania, and West Virginia) had implemented mine subsidence insurance programs.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

   A search was conducted to determine whether any other states had implemented similar
programs and whether any of the states previously identified had amended their statutes. The
search revealed that, since 1986, Indiana has enacted a mine subsidence insurance program and
that Illinois had amended their statute. This Report will discuss these two programs as an update
of STATE INQUIRY REPORT - 67.

   As was discussed in the previous Report, each of these state programs has the same basic
structure. A "mine subsidence insurance fund" is established, which is administered by a board or
other authority. The statutes require that every insurance policy written is to include or to make
available insurance for losses caused by subsidence damage, with exemptions for structures
located in certain counties or areas. Any person authorized to write property insurance in the
state may write such a policy, and enter into a reinsurance agreement with the state. For
information on the areas in which the state programs differ, please refer to STATE INQUIRY
REPORT - 67.

   Numerous changes and amendments were made to the Illinois program, most of which pertain
to the regulation and maintenance of the program. One major revision to the Illinois program was
an increase in the maximum amount of coverage. Prior to October 1, 1985, the value reinsured
by the fund could not exceed $50,000.00. This section was amended to state that, after October
1, 1985, the reinsured value may not exceed $100,000.00, thus doubling the amount of
coverage. (Illinois Revised Statutes, Ch. 73, Sec. 804 (1987))

   The Indiana program is similar to the other five programs, but does contain different methods
of administration. As with the West Virginia and Kentucky programs, only damage resulting from
the collapse of underground coal mines is included in the definition of "mine subsidence". Losses
caused by earthquakes, landslides, volcanic eruptions, and collapses of storm or sewer drains are
specifically excluded.

   Like the Kentucky program, the Indiana statute makes no provision for fiscal appropriations to
the insurance fund by the state. Premiums remitted by insurer are to be deposited in the fund, as
well as funds obtained from federal grants or from "any other sources" (Ind. Code Sec. 27-7-9-7
(1987)) Insurers are not required to pay any claim for any subsidence damage, should the
amount available in the insurance fund become insufficient to reimburse the insurer for the claim.

   As with the Kentucky and Ohio programs, the maximum amount to be insured under the
Indiana program is $50,000.00 per structure. The deductible is two percent of the insured value,
but is to be no less and $250.00 and no more than $500.00.

   The most significant difference between the Indiana program and those implemented in the
other states is the fact that subsidence insurance coverage is not mandatory. Rather than state
that this type of insurance coverage is mandatory in all counties, except those specifically
exempted by statute, Indiana's law states that this type of coverage will only be available in
certain counties which are within the Illinois Coal Basin or which are underlain by coal-bearing
rock formations. It should also be noted that, under the Indiana program, insurers are not
required to inform a potential policyholder of the coverage unless a specific inquiry is made.


ATTACHMENTS
A    COALEX STATE INQUIRY REPORT - 67, with attachments.
B    Illinois Revised Statutes, Ch. 73, Sec. 801 et seq. (1987).
C    Indiana Code Sec. 327-7-9-3 et seq. (1987).
D    Ohio Administrative Rules (1987).


Search conducted by: S. Michele Manning

(Home Page)

Office of Surface Mining
1951 Constitution Ave. N.W.
Washington, D.C. 20240
202-208-2719
getinfo@osmre.gov