Natural Disaster Insurance Coverage for Water Pipe Damage Caused by Possible Eruption Near Svartsengi

Hulda Ragnheiður Árnadóttir, CEO of Natural Disaster Insurance Íslands, says in an interview with mbl.is that natural disaster insurance would not have to insure the damage that would occur if water pipes in houses were damaged if hot water stopped flowing due to a possible eruption near Svartsengi.

Jón Gunnar Ásbjörnsson, lawyer at the Landslög law firm, doesn’t think it’s so clear.

There is great concern that everything in Suðurnesj will be without hot water if the power plant in Svartsengi and its operations are stopped due to a possible outbreak in the area.

Aside from all the problems that come with not having a hot water supply, there is also a risk of water pipes freezing and bursting if hot water no longer flows through them.

This would lead to huge financial losses.

Says the damage is indirect

When asked whether Icelandic natural disaster insurance covers damage that could occur in the water pipes in people’s homes due to these causes, Hulda says that it is indirect damage because it is due to the failure of the power plant.

She says natural disaster insurance only compensates for direct property damage.

“This is not covered by Iceland’s natural disaster insurance,” says Hulda.

Considers it likely that natural disaster insurance will need to cover such damage

However, Jón Gunnar believes it is likely that damage to inner pipes under these conditions will be covered by natural disaster insurance.

He says interior pipes are covered by compulsory insurance because the pipes are part or security of the property itself. Buildings, household contents and movable assets insured against fire by an insurance company with an Icelandic license are insured against natural disasters.

“It’s directly related to the outbreak, I would say. “If part of the compulsory insurance is damaged by an insured event, for example a fire, in my opinion nothing other than direct damage is insured,” he says, adding:

“I believe that the reservation of direct damage in the law on natural disaster insurance tends to exclude indirect damage such as damage from loss of use, loss of profit and the like, but not damage to the property itself.”

The activation in Svartsengi. It is believed that the center of the land giant is located nearby.

mbl.is/Hákon