Get 2 kinds of insurance for any in-ground oil tank! archived

lisat said:

The reason I'm doing this is because we are having our property dug up at this moment and we were told yesterday that the price tag will be at least four hundred thousand dollars.

OMG!!!

Sorry to hear you're going through this. But so glad it'll be covered by insurance!

Thank you. Me too. Just spoke with a friend who thought she was covered but isn't. Apparently the insurance company sent a notice out years ago that they were dropping the oil tank coverage. It's the kind of notice that I would have thrown away without thinking about it.

I just called. I have Pro Guard coverage and am covered through USAA for $100k. I have no reason to think its leaking but would love it out. How much would it cost to voluntarily remove it?

algebra2 said:

I just called. I have Pro Guard coverage and am covered through USAA for $100k. I have no reason to think its leaking but would love it out. How much would it cost to voluntarily remove it?

Make sure you read the policy - if you pull the tank voluntarily and there is a leak you may not be covered.

My understanding was if you pulled it voluntarily and there wasn't a leak you weren't covered for the cost of the pull. By the way, our Proguard was through our oil company, Jaekel. And the manager at Jaekel has been very, very nice about explaining everything. So you may be able to call your oil company and have them explain what is covered by Proguard.

lisat said:

Thank you. Me too. Just spoke with a friend who thought she was covered but isn't. Apparently the insurance company sent a notice out years ago that they were dropping the oil tank coverage. It's the kind of notice that I would have thrown away without thinking about it.

In speaking with someone at the oil company today, I discovered that part of the soil sample testing enables them to predict 'aging,' so they assess how many years the tank has been leaking. This enables the insurance company to 'stack' and possibly go after other insurance companies who were covering the tank years ago. By the way, I mentioned to my friend, that if insurance companies do this in order to stack that perhaps she can too. If a tank has been leaking for 10 years and 2 years ago the insurance company says, hey we don't cover this any more but the homeowner had insurance for 8 of those 10 years, maybe the insurance company can ask for the 'aging' soil sample test and go after the insurance company for coverage for the eight years the tank was believed to be leaking.

OMG! 400K?! We opted not to get oil tank insurance b/c we knew we were going to decommission it soon after our home purchase. We transferred to gas 3 weeks ago and we are getting our above ground oil tank located in our basement removed on Friday. I hope to god there isn't a leak, but my gut tells me we are fine as I can see the tank and would think I would notice a leak. This is terrifying.

If it's above ground I don't THINK you have to worry.

Here is some valuable info from the state...

http://www.state.nj.us/dobi/division_consumers/insurance/oiltanks.htm

Lisat, I would get the "stacking" thing IN WRITING.

This is terrifying and horrifying! How can anyone afford this or be able to sell their house? In some cases, it seems like it will cost more than the purchase price of the house? Insane!

purrlygirl said:

This is terrifying and horrifying! How can anyone afford this or be able to sell their house? In some cases, it seems like it will cost more than the purchase price of the house? Insane!

What if someone bought 30 years ago with an improperly abandoned (and unknown) tank on their property from the 1940s or something? You have no idea it's down there until you go to sell and it turns up on a tank sweep. You thought you had $400,000 in equity but it turns out you have nothing.

Terrifying is one way to put it.

Good grief. I saw a house with a big tank pulled out on the lawn in Golf Island a week or so ago.....drove by again yesterday and it was still there. Can't help wonder if they are going through some crap right now as well (or is that Lisat's house?) Everything seems stopped like a crime scene.

we dropped the home owner's coverage because we thought, oh we have the Proguard! thank goodness the leak was small and hadn't spread! but this is good advice.
I'm sorry you are dealing with this, too. amazing!

When we had our tank pulled, it was the last week of the year. The Village inspector was there at the time, but he said he couldn't hang around because he had a holiday party to attend, so off he went and the damn tank sat on our lawn all winter. I'm sure the neighbors appreciated staring at it.

I also found this...and it explains nicely WHY your homeowner's cover someone else and not you. First party coverage in the world of insurance is coverage designed for the named insured (the homeowner). Third party falls under liability and covers insurance for all 3rd parties (anyone BUT the homeowner). Please note that over the years, insurers have either added limits on what they will pay for certain things, or they have fully excluded them under the liability portion of your policy.

***

Does my homeowner’s insurance cover oil tank leaks?

In order to understand the answer to this question we need to explain the difference between first party coverage and third party coverage. First party coverage deals with a leak and subsequent clean up that is confined to your property. Third party coverage deals with a leak and subsequent clean up that spreads to your neighbor’s property. Under New Jersey case law, the definition of third party coverage also includes the clean up of groundwater, even if it is limited to your property.

Homeowner’s insurance policies generally contain a provision that excludes first party coverage. Therefore, your homeowner’s insurance will pay only for the portion of the clean up which relates to the following:

1. Groundwater impact on your property.
2. Contamination that has migrated to your neighbor’s property.

***

we had ours pulled a few yrs ago. Pulling the 1000 tank was the easy part. There was a small leak. A huge hole was left for months while I called the remediation co. repeatedly. finally they said the hole was close to neighbors driveway and further digging might cause it to collapse, so unless they signed a waiver, the co. wouldn't come back. Took 4 mos. for anyone to tell us this. Neighbor signed, co. finally came, destroyed more trees and entire lawn, casually mentioned 'good thing you don't have ground water contamination, the tank ins. doesn't cover that.', if leak went under our porch (it was close)- house damage not covered. If neighbor's driveway collapsed- not covered. If we switched to gas- not covered. thank god it is now over and done.

Yes, today I was told that if the contamination reached the groundwater (I think it did), then the homeowners covers that not the Proguard even if some of the water was on our property.

mammabear said:

Here is some valuable info from the state...

http://www.state.nj.us/dobi/division_consumers/insurance/oiltanks.htm

Lisat, I would get the "stacking" thing IN WRITING.

This of course makes me wince. Several things go through my mind, including 'I hate for people to not like me,' 'What if she doesn't want to put it in writing?' 'What if they don't have to stack it and asking to have it in writing pisses someone off and they decide not to stack it?' 'Should I have our lawyer do it, because lawyers can be bad guys and I don't want to be demanding?' 'Can I hire mammabear to do it for me?' 'Boy it's good thing I didn't become a manager of anything because really you have no backbone, lisat.' The thoughts go on and on.

Jackson_Fusion said:

Good grief. I saw a house with a big tank pulled out on the lawn in Golf Island a week or so ago.....drove by again yesterday and it was still there. Can't help wonder if they are going through some crap right now as well (or is that Lisat's house?) Everything seems stopped like a crime scene.

We aren't in Golf Island so yes someone else is going through it. As the weather gets better, I bet more people will be going through it.

katydid123 said:

OMG! 400K?! We opted not to get oil tank insurance b/c we knew we were going to decommission it soon after our home purchase. We transferred to gas 3 weeks ago and we are getting our above ground oil tank located in our basement removed on Friday. I hope to god there isn't a leak, but my gut tells me we are fine as I can see the tank and would think I would notice a leak. This is terrifying.

They do sell proguard insurance for above ground tanks and it is half the cost. However, we have an above ground tank now and I am skipping the insurance for that.

And yes, there is a part of me that is getting nervous that something isn't going to be covered for as much as we think.

The following is from the link set up by mammabear. (Thank you mammabear.) Since I don't see a scenario about 'stacking' policies, I will get up the nerve to ask for this in writing. Gulp.

Pollution liability caused by leaking oil tanks has become a major problem in New Jersey. Costs to clean up environmental damage, particularly damage to water supplies or aquifers, can run into millions of dollars. Insurance companies have implemented one of the following approaches in handling oil tanks:

1. Most homeowners policies exclude pollution liability caused by oil tanks with an option to buy-back $100,000 of pollution liability coverage for an additional premium. The “buy-back” of oil tanks coverage may only be offered once to new applicants or current policyholders. Once they decline, they can not buy the coverage on any future policies. There is no first party coverage provided.

2. Several companies impose surcharges for the presence of oil tanks on the premises. Coverage is provided for liability caused by above ground or underground oil tanks up to the homeowner's policy liability limits. There is no first party coverage provided.

3. Some companies provide $10,000 first party remediation coverage and limit liability for escaped fuel to $50,000. There is no additional charge for this coverage and higher limits up to $300,000 may be offered.

4. A few companies provide coverage for liability caused by above ground or underground oil tanks up to the homeowner's policy liability limits.
Please be aware that many companies have underwriting guidelines that may prohibit the writing of risks with oil tanks on the premises or based on the age of the tank.

Since oil tanks may ultimately leak, the Department urges all homeowners with oil tanks to have their tanks tested and inspected and to replace old oil tanks to protect New Jersey's environment and to prevent a homeowners pollution liability loss.

Lisat...I had USAA for years and I have a current policy from my old house. It renewed in the summer. They specifically limit liability coverage to $100k for "bodily injury and property damages losses which are the result of damage that results from loss arising from accidental escape, leakage, seepage or migration of fuel from a fuel storage tank." That language appears in the front pages of the policy.

I'm just nervous about what you are telling me because I've never heard of "stacking". I'm not familiar with any provision that would allow you to look back through years of damage and use the limit over and over again. I'd be THRILLED if they agreed to do this (and I pray they do for you!), but I've not seen it happen.

Edited for clarification...I do expect that both Proguard and USAA will pay their respective portions of the claim. Proguard (first party coverage) will take care of damages to your property and USAA (3rd party coverage) will take care of damages to your neighbor's property. NJ case law also says that once seepage hits ground water, even if it's on your property, it fall under 3rd party liability (in this case USAA).

Well, I guess I am never going to move. And my kids will inherit the house, and THEY'LL never move. And so on, etc. Cuz I don't have $400,000 to pay if there is a leak. So if I never sell, and let my decommissioned tank lie there for an eternity, then there's no problem...right? The problems all seem to come when the tank is pulled. :-((

Hazel,

I may be wishful thinking, but I don't think this situation will remain so potentially financially disastrous. For those who have to sell right now, egads.

mammabear, thanks. I had the same reaction you did, which is why I'm nervous about making them put it in writing. As someone said to me, 'it sounds like they're trying to help you out,' to which I replied, I think they do it so they can go after other insurance companies that covered the house when previously owned. The first person who mentioned it was with the environmental company and the second person was the representative from USAA who has visited the site several times and is overseeing it.

Hope so Orzabelle!

lisat said:

mammabear, thanks. I had the same reaction you did, which is why I'm nervous about making them put it in writing. As someone said to me, 'it sounds like they're trying to help you out,' to which I replied, I think they do it so they can go after other insurance companies that covered the house when previously owned. The first person who mentioned it was with the environmental company and the second person was the representative from USAA who has visited the site several times and is overseeing it.

Insurance companies don't help you out. They tend to follow the limits of the policy. Some firms - i.e. Chubb - historically are more generous in valuations and speed of payments but thats why Chubb gets away with charging a premium rate.

Stacking policies is pretty normal - it happens all the time in auto accidents (i.e. passenger get benefits from both driver's policy plus his own auto policy). Its probably already in writing - try looking at your policies. Homeowner's policies cover a fixed time period. As long as the event or occurrence occurred within that period, you can get the value of that policy. Each year, you pick up a new policy and so you have the ability to get a share from that new policy period. (Caveat - not sure of the NJ approach to oil leaks but it sounds like NJ treats the event as lasting from when the leak started to when it ended and thus there are occurrences in multiple periods.) Don't be afraid to ask your agent for more details - unless you have a lot of cash sitting around, you need to be sure the bills would be paid.

bog, thank you.

Bog, what worries me is that I've not heard of this "stacking" as it pertains to homeowners and oil tank issues. In an auto accident, yes, due to multiple drivers, different limits/policies, pip etc. But in homeowners, 3rd party claims go to the liability portion of your policy. And policies have specific limits attached to some things. And each claim is a one shot deal. Usually, the event occurs, is reported, and is paid based on the policy that applied at the time of the claim. There's not a "look-back". It's a single event. Language is very clear.

What I am hoping is going to happen is that proguard will cover their damages and make lisat "whole". And if there are 3rd party damages, USAA will step in. Or perhaps if it's a huge, huge mess, and they can establish it's been going on for years, maybe USAA will subrogate behind the scenes with prior ins companies if there are any, and each will kick in and share the loss. This could happen.

In any case, fingers crossed on it all!! I'm sending you good vibes lisat!!

I can't imagine an insurance company "helping you out" over and above whats written, especially to the tune of six figures. This isn't like swallowing a deductible on a car accident. Obviously you do what you're comfortable with, but I'd have my lawyer on it ASAP.

orzabelle said:

Hazel,

I may be wishful thinking, but I don't think this situation will remain so potentially financially disastrous. For those who have to sell right now, egads.

I don't see how it can stay this way. People will be walking away from their houses and/or declaring bankruptcy, and not cleaning up the mess, leaving the mortgage companies on the hook. They'll find a way to avoid being vulnerable in this scenario, probably by refusing to finance a house with any kind of in-ground oil tank, for starters.

mammabear said:

Bog, what worries me is that I've not heard of this "stacking" as it pertains to homeowners and oil tank issues. In an auto accident, yes, due to multiple drivers, different limits/policies, pip etc. But in homeowners, 3rd party claims go to the liability portion of your policy. And policies have specific limits attached to some things. And each claim is a one shot deal. Usually, the event occurs, is reported, and is paid based on the policy that applied at the time of the claim. There's not a "look-back". It's a single event. Language is very clear.
...
In any case, fingers crossed on it all!! I'm sending you good vibes lisat!!

Ahh..but what is the event in an oil tank leak? Is each drop of oil another event? NJ takes the continuous trigger approach thus the event runs from the start of the leak until the some point (multiple ways for the event to end). It allows you to hit up each insurance policy in force during the entire period. While each policy has a limit, you get a new policy each year - thus multiple limits that can be added together.

Lisat's case is easy since she has had the same policies throughout the entire period. No need to allocate loss since the event started long enough back to generate sufficient coverage.