A recent Massachusetts news story about a couple whose home heating oil tank leaked causing thousands of dollars in damage, has many homeowners wondering if their home insurance provides coverage for an oil tank leak. Home oil tanks contain hundreds of gallons of home heating oil. If your home heating oil tank leaks, it can cause extensive damage to your home, possessions, the environment and even your neighbors’ property.
All residential oil tanks and systems have the possibility of leaking, regardless of their age or any upgrades. According to Safety Insurance, “most home heating oil spills and leaks result from the delivery or supply line that carries home heating oil from the storage tank to the furnace.” (1)
The cost of remediation of a residential oil spill is expensive and depends upon how many gallons have spilled, how long the spill was allowed to continue, whether the concrete and/or ground below the tank has been affected, whether a water supply or neighboring property was affected, as well as other factors. The costs of remediation can range from $15,000 to more than $150,000, which could jeopardize a homeowners’ financial stability.
If your home is heated by oil, with a tank either above or underground, it’s important to know what your homeowners’ insurance will or will not cover.
Does my Massachusetts Home Insurance Cover Oil Tank Leaks?
Most standard homeowners’ insurance policies provide coverage to repair or replace your home and its contents in the event of damage caused by fires, lightning strikes, windstorms and hail, theft or vandalism. However, there are some losses not covered by home insurance without a supplemental policy. Unfortunately, home heating oil tank leaks fall into this category.
Most homeowners’ policies have a pollution exclusion provision and don’t cover remediation for oil leaks without the purchase of an additional Escaped Liquid Fuel Endorsement.
A law was passed in 2008 in Massachusetts that requires:
- The installation of either an oil safety valve or an oil supply line with protective sleeve on systems that do not currently have these devices: and
- Insurance companies that write homeowner policies to offer coverage for leaks from heating systems that use oil. (2)
Despite the law, few homeowners have invested in the optional coverage. In fact, environmental law attorney Susan Crane said only “7% of Massachusetts homeowners who heat with oil have the coverage in place.” (3)
What is the Cost of Adding the Escaped Liquid Fuel Endorsement to my Homeowners Policy?
It is important to note that the cost and coverage of the Escaped Fuel Endorsement varies by insurance company and by the individual terms of the policy.
However, in most cases $100,000 worth of coverage is available for as little as $87-$100 annually. When weighed against what could be substantial clean-up and liability costs in the event of a leak, the cost of the coverage is miniscule.
How Can I Add the Endorsement?
The endorsements that are offered are based upon tanks and fuel oil systems complying with Massachusetts “Homeowner Oil Heating System Upgrade and Insurance Law” (Chapter 453 of the acts of 2008, amended 2010)(2). The steps to add the endorsement will differ depending on your specific insurance company, but most require the following to add the endorsement:
- You must have either a non-metallic sleeve around the pipe that feeds the burner or a safety valve to prevent leaks
- You must have a visual inspection of the fuel supply lines for the heating oil storage tank completed by a certified oil technician. The oil technician must then sign and date a certificate of compliance Form 1A.
After these steps have been completed, your Account Manager can add the coverage to your existing homeowner’s insurance policy.
What Does the Escaped Fuel Endorsement Cover?
Again, the coverage provided by the endorsement will vary depending on the insurance company that provides your homeowners’ insurance. Typically Escaped Liquid Fuel Endorsements can provide coverage for:
- The expense of cleaning, decontamination and/or remediation of your property.
- The cost of damage caused to your property by the sudden and accidental overflow/escape of fuel oil from an oil tank, or supply lines connected to your heating system.
Most escape fuel endorsements do not provide coverage for:
- loss or damage resulting from repeated escape/overflow of oil
- If damage occurs while the building is under construction or,
- If damage occurs while the building is vacant.
Steps to Help Prevent My Home Heating Oil Tank from Leaking
The following preventive measures have been provided by our partners at Safety Insurance.
- Have annual maintenance for both your heating furnace and oil tank to prevent future problems
- Install an automatic shutoff valve
- Replace the fuel supply line with one encased in a non-metallic protective sleeve
- Keep the area around the heating system clear of debris and flammable materials
- Install smoke detectors and carbon dioxide detectors in your home and change the batteries (if applicable) each year
Home heating oil leaks can not only be a pain to clean/remediate but can also be costly, cause environmental damage, and the fumes pose a significant risk to homeowners’ health.
Your Account Manager can review your current homeowners’ insurance to ensure sufficient coverage in the event of an oil heat related loss or make recommendations for adding the Escape Liquid Fuel Endorsement to your policy. In addition to home insurance, McSweeney & Ricci has provided car insurance, condo insurance, boat and watercraft insurance, as well as life and business insurance to thousands of Massachusetts individuals and families since 1964. Look to McSweeney & Ricci for broad coverage, competitive rates to suit a variety of budgets, and the local insurance support you deserve.
Contact McSweeney & Ricci for more information at (844) 501-1359.