In recent months, both you and I have heard the experts on every side report on the increasing instability of our economy. With fluctuating energy costs and a tough housing market, many of us would like nothing better than to bury our collective head in the sand and wait until the trials and tribulations finally pass us by. However, we recognize that this option will neither better the situation nor protect our assets from further downfall and ultimate devastation. For owners of both residential and commercial properties who utilize oil heat as an energy source, one important financial and environmental safeguard is storage tank insurance.
Residential properties need to be protected against the economic and ecological hardships created by seeping oil tanks. This potential concern can be compounded exponentially if the oil tank is buried beneath the ground. Oftentimes, a consumer will not even know that a tank has been leaking until they receive their first oil delivery of the fall/winter season. Instead of the delivery of oil lasting a month or more, the tank’s contents will be drained in a matter of days. It is only then that a red flag is raised and the problem addressed. By this time, it’s often too late. Costs may soar and hassles begin. The releases are sometimes covered by homeowners insurance for third-party liability issues related to the release of oil (e.g. leaks below groundwater level or onto a neighbor’s property), but are seldom to never covered for actual first-party clean-up or tank replacement. Enter the ProGuard Program.
Established in 1999 and going strong with over 50,000 residential oil heat customers in the Northeast, ProGuard is a protection plan designed exclusively for residential oil storage tanks. It helps to defray the costs associated with a release of oil, should one ever occur on a participating customer’s property. The program offers up to $100,000 for first-party clean-up costs, as well as up to $2,000 toward the installation of a new oil tank. At the first sign of a release, the client simply calls ProGuard’s claims hotline and the wheels are set in motion. A participating contractor is dispatched to handle remediation of the soils and to restore the site. Cost to the consumer to hold an annual Service Agreement for this program is roughly $275.
In the case of commercial properties, the ramifications of a fuel release can be even more grave. On the average, tanks that service commercial sites hold significantly greater quantities of fuel and are often located in more populated areas. Owners of apartment buildings, offices, industrial property and retail establishments may literally be placing their livelihoods on the line if they’re not properly insured. Commercial Storage Tank Liability “provides coverage for releases… that emanated from scheduled storage tank systems for clean-up costs on-site and off-site, as well as third-party losses. The coverage can [also] be used to meet U.S. EPA financial responsibility requirements.” (www.usassure.com)
This commercial market is very competitive indeed. Many of the insurance companies which are rated “A” (excellent) by evaluation groups such as A.M. Best offer specialized coverages for fuel tanks. These tanks may hold any variation of fuel types, such as oil, gasoline, kerosene and diesel. The policies cover a wide range of concerns, from third-party bodily injury and property damage, corrective action and clean-up of pollutants to physical injury and endorsements for motor vehicles and trailers; a wide range of coverage limits are available to fit every property type and budget. Typically, the average storage tank policy will offer $1 million in coverage with a $5,000 deductible. Depending on the age of the tank, rates may range from as little as $700 to slightly under $2,000 yearly. Policies are generally issued on an annual basis, with an offer by the company to renew coverage at the current term’s end. A reputable insurance agent licensed for commercial lines business can assist you with choosing the proper amount of coverage.
The application process for most insurance companies is fairly straightforward. Prior to submission, any tanks which are listed on the schedule of properties need to be tested. The most popular test employed is the “Digital Mesa 2-D Test System.” This type of testing is a digital acoustic profile, which evaluates the integrity of the tank. It is not a vacuum test and will not harm the system, but can detect a leak in both the wet and dry portion of the tank. Testing the soil is also a very reliable means by which to glean a tank’s condition. Three to four soil samples are collected from around the area of a tank and submitted to a laboratory for analysis of petroleum hydrocarbon content.
Once testing has been performed, the application stating particulars of location, tank contents and history of claims made is collected and submitted to the insuring company along with the testing results. A quote is then generated online by an insurance agent and provided to the applicant. Should the applicant wish to bind coverage, all that is needed is payment of premium. Once premium is received, the policy document is promptly delivered and coverage is in full force and effect. A relatively simple procedure for the peace of mind it delivers.
In these ever-changing financial times, a small amount of time invested on your own behalf can potentially reap great rewards down the line for residential homeowners and commercial property holders alike. Be sure to look out for yourself. Don’t skimp on protection because you think it won’t happen to you. Be certain that your property carries the proper “extended” insurance coverages.
Gary Missigman is President and Kelly Toncar is Program Manager of The Powderhorn Agency, an independent insurance agency located in Brookfield, Connecticut. Powderhorn administers the ProGuard Program and also offers commercial property and liability coverage. The company’s newest venture, Pro-Sept, is a protection plan for residential septic systems. If you’d like further information about any of these programs, visit www.powderhornagency.com or call 888-354-0677.