LIABILITY INSURANCE ON (leased)VACANT LAND FROM HOMEOWNERS INSURANCE IN PA.

I live in one area and have vacant land in another area. I am aware that you have automatic liability coverage extended from your homeowners insurance to your vacant land as long as there is no structure, etc. on it, and they recommend that you have no hunting /trespassing signs properly posted.  BUT now if you have a LEASE with a gas company, some (maybe all) insurance companies will now NOT cover that vacant land, even though there is NO activity by the gas company on that land. Also one insurance company stated that since you got bonus money from the lease, that means that you made money off that land and we will no longer honor that extended liability clause that extends from your homeowners to that vacant land. I called another company and they said that they will not cover it because I now have a lease on it, although I tried to explain to them that I just have a lease and that there is no activity, drilling, etc. on it, and if and when they start drilling or whatever on my vacant land, I then will call them and then they could drop me or remove that  extended liability clause. Anybody have any input or insight to this issue/or talked to their insurance company?  I would like to believe that insurance companies could distinguish between an inactive lease vs. an active one (drilling, pipes, etc.)

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Permalink Reply by Buddy on February 11, 2012 at 6:37am

Even if the area is drilled, why can't you go to a professional insurance company for liability insurance?  I am thinking of looking into this for our mineral rights property.  What do you think?

Permalink Reply by Billy Park Whyde on February 11, 2012 at 6:43am

What kind of liability insurance would you need on vacant ground? If the land is posted no one should be upon that land to create a liability issue.

Permalink Reply by randall gottus on February 11, 2012 at 10:38am

yes...but people HAVE been sued, even if land is POSTED. Having land posted is not a guarantee...it only weakens their case. An attorney will tell you that/and read up on previous cases regarding this issue.  Insurance that you have would represent you and fight for you and use their attorneys and money to fight the case. That is a feature of all home owners policy in Pa.--liability is extended to any vacant land you have. BUT once you sign a lease, they will not honor that liability feature anymore. I would recommend any one with vacant land that has a LEASE on it, and you do not live on the land, to call their insurance agent and ask them if they will continue the extended liability feature, and put it in writing. ...please let me know what co. will do that.

Permalink Reply by Billy Park Whyde on February 11, 2012 at 11:30am

Did you know that a landowner that allows hunting upon his property in Ohio is exempt from liability?

Permalink Reply by Janice L. Hancharick on February 12, 2012 at 8:53am

First I would check w/your state's Insurance Commissioner's office.  Learn what the state's regulations are along this line.  What holds true in one state may not be the same across state borders. Then realize that all insurance companies do not treat each segment of their various product lines the same.  A blanket statement that covered your questions would be misleading to so many readers.

Why not have  strong liability clauses included in your initial lease document?  That's how 4-County (Cattaraugus & Allegany in NY, and Potter/McKean in PA) is doing it.

Don't know where you are but our next meetings are FEB 21  6:30 Fire Hall   171 Rte 6W  Coudersport, PA  and

FEB 22  6:30   Grange Hall   55 Park Circle   Angelica, NY.  Drop by if you can.

Permalink Reply by randall gottus on February 12, 2012 at 11:57am

...yes,  I am referring to Pa.  And yes, you make some good points. But the state s insurance commissioner s office has not made any strong statement regarding this issue thus far. And each different company I have called has a different answer, and was unable to make a strong ,definite statement that they would WRITE in the declaration statement of one s insurance policy. It appears that this is new to them, and are not prepared to deal with it yet.  I even got a different answer from two different  underwriters of the SAME company.   ....until then, I like your suggestion of having a lease that has a clause STATING that the gas company will duplicate the liability insurance from your homeowners policy to the vacant land the minute the lease is notarized. IT APPEARS THAT THERE ARE MANY PEOPLE IN PA. WHO SIGNED A LEASE ON THEIR VACANT LAND AND ARE UNAWARE THAT THEY MAY NO LONGER HAVE THAT LIABILITY COVERAGE EXTENDED FROM THEIR HOMEOWNERS POLICY.

Permalink Reply by Janice L. Hancharick on February 13, 2012 at 4:35am

You are absolutely right.  There are many other items signers were unaware of @ time of "sealing the deal".  In 2 states (PA & NY) where drilling has gone on forever ... we were still caught with our pants down on so many issues.  Many of our key gas/oil attorneys "went to TX & OK" back in the 50's when big oil was discovered down there. The few who stayed behind to serve a dwindling industry were employed by Shell, Range, EXxon a few years before Marcellus fever hit the public's eye.  The remaining  ones who went into other areas of law have been playing catch up ever since to better serve their clients.  In the past 2 yrs. Continuing ED. classes focusing on gas/oil leasing ( and related issues) have been well-attended.  The insurance industry is no different.  Getting good, solid advice is a challenge ... not because the states are populated by idiots ... we just weren't prepared!  Many have followed the advice of Penn State's Marcellus Center for Outreach and Development which advocates Group efforts for a solid leasing experience ... one where the landowners resources are represented by experienced professionals ... not one or two but a firm with a heavy footprint already established in the world of Big Business.  Leasing is not for sissies, nor for those looking for a quick buck ... unless they don't care about the land itself.

I know I've digressed away from insurance, but there are so many aspects to consider if one is to achieve a good lease.  Certainly liability is a "biggie" and so are many others.  We can't wait for all safeguards to be made into law.  They MUST be in the lease.

Permalink Reply by randall gottus on February 13, 2012 at 1:04pm

  But is there a lease out there that states that the gas company will duplicate/offer , and enforce the extended liability insurance that you have in your homeowers policy to the vacant land that is being leased, the minute the lease is notarized. WHAT CONCERNS ME IS THAT THE MANY PEOPLE THAT HAVE A GAS LEASE ON  VACANT PROPERTY THAT THEY DO NOT LIVE ON IS NOT AWARE OF THIS PROBLEM...until it is too late.

Permalink Reply by Dan on February 13, 2012 at 3:54am

Have you looked at another provider?  If your insurance provider is currently a PA company involving a great body of water another company should be able to service you with far less resistance.

Permalink Reply by randall gottus on February 13, 2012 at 12:51pm

...Dan,yes, many...I am not sure you are grasping what I am saying. But thanks for your response.

Permalink Reply by PRESTON D Joswiak on February 14, 2012 at 3:17am

To shed a little light on this 99% of alll homeowners polices will not cover business activities.  Personal Liability in a homeowners is not set up to cover any business including farm. Some insurance companies will add a limited endorsement that might help in a small way, but the personal homeowners will not do the job. Even an umbrella does not cover the extra liability of a lease.   That is why I had a hold harmless clause added to my lease with Shell.   This is the best way I could see to protect myself from any occurance that might happen from  the drilling. As far as the vacant land it is still covered for any non-drilling/lease claims that might come up.  I have been a licensed insurance agent for 30 years and represent over 20 insurance companies  in 3 states.   I do have 1 company that will cancel any policy with a lease on it, but the rest are not taking any action for now.

Permalink Reply by Janice L. Hancharick on February 14, 2012 at 4:59am

In addition to what Preston has posted, when I earlier referred to taking care of liability issues through the inital leasing agreement my thoughts were running along some of the Indemnity and Legal Liability lines used in 4-County's group document.

Protection for the landowner through Indemnification for any and all site operations.

Requirement of adequate insurance coverage (general liability, workman's comp & disability, care, custody, control , etc. and bonding etc.)  Companies not able to meet these pre-qualifiers for any reason, are excluded from bidding on our production units. 

This where it begins. It takes alot of homework and due diligence on a Group's part to make all this come together @ a fair price and royalty %.  Liability is a BIG tip of the iceberg often overlooked or not stressed enough in the negotiating process.

This is a very good thread for folks to monitor.

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