It’s not on the current radar, with more and more natural gas customers, but oil tank spills still occur. Although the buried tanks are more harmful to the environment, indoor tanks can cause just as much damage and frustration.
According to the EPA between 1988 and March of 2016, there have been 529,390 confirmed spills in the US. If it happens to one of your insureds, here are some things they need to consider going forward:
First, the majority of carriers will only write above ground tanks that are located on a concrete slab and have no combustibles stored around them. To insure an underground tank – it will need to be abandoned – the carrier will require a certificate of abandonment and a soil test showing there was no leakage. Just calling around, I could not find a carrier who would accept the exposure.
That being said, unlike policies ten to fifteen years ago, carriers no longer cover spills and leaks on the regular policy; however, some do offer an endorsement you can add – although that is disappearing fast.
The majority of the policies out there will only cover damage to other people’s property. This comes in handy if they are anywhere near wetlands or water ways.
All spills must be reported to either the local or state environmental agency. Once the spill is cleaned up, they will need to release and approve the clean-up. The EPA requires tank owners keep records of testing and inspections.
If the insured does not report the spill and it causes further damage – there could be state and local fines handed down to the insured. Before you guess, no, those fines are not covered under the homeowner’s policy.
Oil tank clean-up is a delicate process and should be performed by a licensed environmental remediation company. One of the worst I remember involved an inside the basement spill. It had been the house of the elderly woman who hadn’t been in the basement in years. Unfortunately, the tank – made of bare steel – rusted out and the oil provider just kept pumping – for an hour – right into her basement.
The cleanup can cost between $100,000 to $1 million. According to the EPA the US has completed clean up on 457,344 oil tanks nationwide.
The EPA does have the Leaking Underground Trust (LUST) fund to assist with clean-ups. It was this type of loan that covered the remainder of what her homeowners could not.
Further, state environmental agency does keep a list of contractors suited for cleanup, so if you are ever asked, make sure the insured is aware and gets the help they need.