March 26, 2011
Most Americans would be shocked to find that in the event of a major nuclear accident at a U.S. nuclear power plant, even in a large catastrophe like Chernobyl in Ukraine, the plant owner is only liable for a tiny fraction of damages that could occur.
The Price-Anderson Act of 1957 was to encourage commercial development of nuclear power by placing a cap on the amount of liability for each nuclear plant licensee in the event of a nuclear accident. Each licensee is required to pay into an insurance pool, currently at about 12.6 billion, which is to ensure adequate funds to satisfy liability claims of the public for personal injury and property damage in the event of an accident at one of the plants.
“Under existing policy, owners of nuclear power plants pay a premium each year for $375 million in private insurance for offsite liability coverage for each reactor unit,” says the U.S. Nuclear Regulatory Commission (NRC) website. “This primary, or first tier, insurance is supplemented by a second tier. In the event a nuclear accident causes damages in excess of $375 million, each licensee would be assessed a prorated share of the excess up to $111.9 million. With 104 reactors currently licensed to operate, this secondary tier of funds contains about $12.6 billion.”
When you consider that nuclear power plants are located near some of this country’s largest cities, including New York City, Philadelphia, Washington D.C., Chicago and Miami, how much would it cost in personal injury and property damage if a major nuclear accident occurred?
According to an article by CNN Money, a 1982 study for the NRC found that a nuclear meltdown could potentially cause 50,000 fatalities and $314 billion (equaling $720 billion today) in property damage.
AOL News reports that a 2009 study by professors at the Risk Management and Decision Processes Center at the University of Pennsylvania’s Wharton School called “Environment & Energy: Catastrophic Liabilities” hypothesized what would happen if a meltdown occurred at Indian Point Energy Center in Westchester County, NY. The study concluded that 64,000 people would eventually die resulting from the incident. They estimated that claims from surviving families would be about $384 billion and that economic losses would be between $50 billion and $100 billion.
25 years since the disaster at the Chernobyl Nuclear Power Plant in what is now Ukraine, cities and villages contaminated with radiation within a 60-mile radius of the plant remain ghost towns, residency and business prohibited due to radiation levels that will linger for hundreds of years. Many people evacuated immediately after the accident, told they would be back home in just a few days, have never been allowed to return.
If a nuclear disaster should occur at a U.S. nuclear power plant and the 12.6 billion insurance fund is insufficient to cover the claims of bodily injury, sickness, disease or resulting death, property damage and loss as well as reasonable living expenses for individuals evacuated, the government and taxpayers would likely be left to pay the rest.
All property and liability insurance policies issued in the U.S. exclude nuclear accidents.
Since the nuclear accident at Three Mile Island in 1979, the insurance fund established by the Price-Anderson Act has paid out $71 million in claims and litigation costs associated with the accident.
Find out how close you live or work to a nuclear power plant with CNN Money’s tool.