Beware: Insurance May Not Cover An Oil Tank Failure
Can you imagine having an oil spill on your own property and the subsequent costs involved in cleaning it up? Depending on the size, location and nature of the spill, the costs could easily reach the 5 and 6 figures or, in one case we know of, the millions! This is not an odd occurrence – I have seen several examples over the last twenty years of oil spills, faulty tanks, buried tanks and site contamination.
While there are no laws that provide for age limit restrictions by either code or regulation requiring an oil tank to be replaced, insurers take a very specific view on this issue.
Recently, I received an email from Grassroots Home Inspections in Owen Sound about home insurance. Attached was a copy of a notice from TD Home and Auto Insurance that very clearly stated:
Please note that damage due to the escape of domestic fuel oil is no longer covered through your main home insurance policy. Provided you are eligible, this coverage can now be added to your home insurance policy through our Domestic Fuel Oil Escape endorsement.”
According to TD’s website, eligible includes having a policy with them already plus:
• You have an aboveground exterior tank which is less than 14 years old or an interior tank which is less than 19 years old. If your tank is near our designated age limit, you may be asked to replace it.
• Your tank is in perfect working condition; this means there are no signs of leakage or spills, no evident fumes or odours.
• Your tank is inspected/serviced annually by a certified or licensed heating contractor.
• Your tank is located on a non-combustible, level support.
• For exterior installations both your tank and fuel supply line are protected from vehicle impact.
• You reside in Canada.
In most cases today, we make offers conditional upon the buyer satisfying themselves that they can obtain insurance for the home they wish to purchase. In addition, people who are putting an offer in on a home that is heated with oil, would be prudent to make the offer further conditional upon having the oil tank inspected to ensure that the system is in good operating order and that it will be compliant with current insurance requirements.
Grassroots has provided some good information about this topic on their website. If you are considering the purchase of a home with oil heat or, with an old oil tank present, it’s crucial that the safety of the system be addressed at the time of an offer. If you are a homeowner with an existing oil system, you would be well advised to have your tank inspected and ensure that your insurance policy covers your system.