Oil tank & insurance q's - About to buy a house archived

Make the current owner pull the tank and get a No Furter Action letter from the NJ DEP. Maybe in 2005 a seller could get away with the old "well, it's insured - you'll be fine" act...but not in 2011.

It's a short sale, and they've disclosed that they have an underground tank. So, will do insurance, but not pull the tank.

I hope that your sister plans on living in that house for a long time, because when she wants to sell the buyers at that time will request that the tank is pulled. Pretty much standard policy these days. Good luck to her.

Her hope is actually to pull it out ASAP herself, but with it being insured. The part that seems strange is the clause in the insurance that says it can't be pulled for a year.

Yes that part is strange.

I had to pull my tank in Maplewood when we moved to SO...Cost me 10K for that and installation of a new tank in the basement...I am very familiar with the NFA letter...having flashbacks now.

I looked on the JW Pierson site about ProGuard, and it does say "Eligible for a "Voluntary Removal" after one year"... so maybe this is their standard procedure.

http://www.jwpierson.com/proguard.php

If I'm not mistaken, you can remove it voluntarily but you will have to pay if there is no leak. If there is a leak, the insurance kicks in. Personally, after the craziness I went through to remove a leaking underground oil tank (with Proguard) I would never buy another house with an underground tank.

Also, you should know that the language for the Proguard contract states that if you change to gas, you will not be insured after 60 days or whatever. This sounds fine but what it means in practice is that if you pull a leaking tank, and you want to be insured for the damage, you MUST continue with oil.

Our tank was pulled two weeks ago. We have proguard. We used Pierson. This is how it worked for us: George Jaekel is our oil company and they checked to see if there was water in the tank and there was. They checked a couple of months later and there was a little more. At some point, Jaekel said, it's possible the water is coming in through the pipes rather than a leak, but we suggest you remove it. It will be called a voluntary pull if there isn't a leak. They pulled it and there is a leak. We are waiting for soil samples. We were told that because there is so much clay in the soil, there's a good chance it would not have spread far if at all. We have proguard for the first 25K and then USAA for an additional 100K.

We were charged $1200.00 by Pierson for the pull. We were charged $1800.00 to have a new tank put into the basement by Jaekel. We were charged $400.00 by NJ for something. Jaekel said that the most we would pay would be approximately 3K if it was a voluntary pull with no leak. Since there was a leak, we pay the 1K deductible and Proguard will pay or reimburse us for all else. Unless of course there is such a huge mess that it goes beyond 125K

sprout said:

The part that seems strange is the clause in the insurance that says it can't be pulled for a year.

The Proguard coverage is provided by the heating oil industry and providers. It's not insurance as we usually think of it because they have a vested interest in having you continue with oil heat even if you pull the tank. The one-year requirement means they'll get at least one season's revenue from you before you pull the tank and/or switch to gas.

caboose said:

Also, you should know that the language for the Proguard contract states that if you change to gas, you will not be insured after 60 days or whatever. This sounds fine but what it means in practice is that if you pull a leaking tank, and you want to be insured for the damage, you MUST continue with oil.

I think it's more than 60 days. I'm pretty sure it's a year. What it means in effect is that there's no way to switch to gas and maintain your coverage. You're pretty much forced to get an above-ground tank for a year.

sprout said:

My sister is in process of home buying in town and has questions about underground oil tanks.
The soil test came out fine, but there is water in the tank. Anyone have any recent experience or recommendations on how she should proceed?

All questions about insurance aside, if there's water in the tank, there's a leak. Beware.

BTDT. If you want Proguard to cover the pull, you have to install an above ground tank first. Then the pull & the tests. Then you must have an oil heating contract for a year. With a leaking, covered pull, my OOP was $2500 deductible, $1800 new install, $400 to NJ because they can. The oil industry is willing to bet that not enough people hate them to spend $4700 to get rid of an underground tank and then spend another $10k a year later to convert to gas.

The requirement for new policy holders to wait a year for a pull is to prevent people from buying the insurance because they know they have a leak. If you have a leak with water coming in to the tank, you probably shouldn't wait the year because you could end up putting in a new furnace. I am not sure what has to happen in order for an involuntary pull to happen and how the coverage treats that.

Sprout - I'm surprised that your sis can even get a mortgage for a home with an active underground tank. Does her lender know? Are they going to require an escrow until it is pulled?


ETA: because of our clay soil, tanks may not show leaks because the clay acts as another layer that encases the tank in a protective manner. My soil tests came up clean, and I had no signs of any problems (no water in the tank, etc). But there were indeed leaks. If there is water in the tank, there is leakage and it is possibly not small. Sometimes moving the tank causes more leaking because the holes are separated from the clay protection. When they find the contaminated soil, they will keep digging down until they get clean soil. As long as the contamination doesn't hit the water table, it isn't a big deal.

Frankly, unless this is the house of her dreams, if I were her, I'd reconsider. So many great houses on the market.

Lisat:
Was your pull within the first year of proguard coverage?

Just wondering if doing a voluntary pull in year1 makes it stay a voluntary pull regardless of condition, or if finding a leak during the pull would automatically trigger coverage.

sprout, no we had proguard for 14 years. By the way, proguard offers additional coverage in case there is third party (neighbor's property for instance) involvement. Our neighbor's property abuts ours right next to (within inches of the tank). We are fortunate that USAA insurance covers third party involvement because we didn't think to buy the third party coverage from proguard.

Water in the tank can be from the valves on top of the tank leaking, in which case it is not considered the kind of leak that proguard will pay for. But we decided we needed to get rid of the tank anyway and that there was a very high probability of the leak being more serious than a valve.

By the way, we have used George Jaekel Oil for 14 years and the woman in charge of the office has been incredibly helpful in our dealing with this -- knowledgeable, kind, communicative, etc.

And the questions USAA asked several times was, 'how long have you lived there?' 'how long have you had USAA insurance?' 'do you plan to move anytime soon?'

I'm assuming the tank is currently in use. Water is usually an indication of a leak. A clean soil sample is not a guarantee that there have been no leaks.

I've never heard of insurance not being renewable after only one year.

If the tank is not currently in use she should absolutely not purchase this house without having it removed.

It is currently in use.

The results of the inspection was that the water-depth was just over the inspection company's flagging limit - which they said could happen from condensation, and they removed the water. And the tank passed their 'tightness' test and 'corrosion' test, in addition to passing the soil test.

I am a little surprised by all the agita about underground tanks. You pay the insurance and forget about it. Like so many other things in life. My guess is that if the housing market ever improves, buyers won't care, either. They care now because they can.

Lisat - was this some extra insurance from USAA or covered under your homeowner's. We have been here 13 years, have an underground tank, ProGuard and USAA too. How much did you pay out of pocket? Was it only pulled because there was a leak? How did you know there was a leak?

NancyB said:

We have been here 13 tears

...Freudian slip??

lisat said:

By the way, we have used George Jaekel Oil for 14 years and the woman in charge of the office has been incredibly helpful in our dealing with this -- knowledgeable, kind, communicative, etc.

And the questions USAA asked several times was, 'how long have you lived there?' 'how long have you had USAA insurance?' 'do you plan to move anytime soon?'

I'd be seriously worried what this loss will do to my insurance premiums going forward. This is your homeowners?

Soul- the "agita" is about the cost & impact on plans. If you have coverage that kicks in because of a leak, you are still out of pocket to the tune of $3k or so. And that's if the tank is in a nice, open grassy space. If landscaping or hard scraping needs to be redone, that cost will not be completely covered.

Even if you don't care about the money, the timelines suck. I started the process in January 2010, thinking that I wanted to be ready to have my house on the market if the opportunity came up. Mine was simple, the soil was remediates fairly quickly & the lawn filled & reseeded. I got my "No Further Action" letter some time in April or May, which amazed people for its speed.

If I wanted to go on the market before the letter, I was told by 4 separate realtors that I would need to be prepared to wait until all the soil tests came back clean, with the reports and put up a very large escrow until the letter arrived. Even then, no guarantee that buyers could get a mortgage.

That's if you have insurance. If you don't, it's a whole other story & the cost can get crazy-high.

Sprout, might be good to do a bit of research on tanks in clay soil and the validity of these tests. I did & learned that the average lifespan of a metal tank in this soil is 10-20 years. The previous owners didn't put in a new tank & lived there 20+ years. I was there 13 years before I contemplated it. Since the hous was built in 1930, I was pretty sure that it was original to the house & had a high probability of having leaks. The hard clay encased it like a protective wrap and prevented any signs of leakage.

Not to be such a downer, but I'd hate to see your sister in a bad spot. I didn't even think about mama's point about being able to get/maintain coverage. Has she checked to see whether anyone will insure the house? Many insurers won't provide coverage for places with underground tanks anymore. Mama knows more, tho.

greenetree said:

Many insurers won't provide coverage for places with underground tanks anymore. Mama knows more, tho.

My homeowner's policy excludes any damages associated with an underground oil tank. Proguard only covers leaks on my property. If oil has leaked into the groundwater or onto my neighbor's property, I'm responsible for the cleanup. I'm having my tank pulled in a few weeks, and yes, I'm worried. If my neighbor's back yard becomes a Super Fund site, I don't have the money to remediate it.

What if the tank is in the basement? Does it change anything, and how? Sorry, don't mean to hijack, but this conversation has gotten me curious.

Sis is reading this thread. Thanks all for the info and helpful experiences!

Basement tank is not a problem. In fact, that's where most people who pull underground tanks put theirs. That's where I have mine.

Abandoned tanks are also really chancy, even if they've been filled with sand. Some lenders & insurance companies are skittish about it.

Yes, I had to remove my empty, remediated tank in preparation to sell. There was soil contamination so it was $15k, including the cost to repave my driveway. Empty tanks have no ins, homeowners excludes it, and the state is not even thinking to look at my application for assistance until 2014.

NancyB said:

Lisat - was this some extra insurance from USAA or covered under your homeowner's. We have been here 13 years, have an underground tank, ProGuard and USAA too. How much did you pay out of pocket? Was it only pulled because there was a leak? How did you know there was a leak?

I don't believe this is a special rider, but I would definitely call them if I were you and ask if it's covered under your regular insurance. When the oil tank issue came for the foreground about six years ago, it's possible I called USAA to make sure it was still covered. I remembered hearing back then that insurance companies were going to stop covering it for new home owners, so I have a vague recollection of call USAA, being reassured, and forgetting about it.

We will pay 1K out of pocket when we are finished, unless the costs to third party go above 100K. The other worst case scenario is that USAA figures out a way to finagle out of it but I don't think that will happen.

2011 was the first year Proguard offered insurance to cover third party impact. I didn't buy it, not because I remembered USAA had us covered (I didn't) but because I wasn't clear on what the additional third party meant. I know now!

This is the sequence of what happened. Husband's dream of having the rock driveway paved is fulfilled. One month later, I start to hear about oil tanks being a problem and ours is right under the brand new driveway.

A few years later, oil delivery guy (very nice man) who fills the tank, says, "You have water in the tank." He recommended having water removed. We hired the recommended company and had water removed. Some time later, oil guy says water is in the tank again, and let's watch it. They check awhile later and there is more water in the tank. They tell us that it could be from valves, etc. They explain that if we want to have the pipes and valves tested to see if they are leaking, it will cost about 1500.00. They recommend having the tank pulled because the unstated understanding is that we have a very old house, and likely a very old tank. So we decide to have the tank pulled.

Before pulling the tank, they install a new tank in the basement, which costs 1800.00. It is explained beforehand that if the tank is pulled and there is no leak, e.g., the valve was loose, etc., then we will be responsible for that 1800.00, but if there is a leak, Proguard will pay for the new tank and installation.

Also explained to us, the pull will cost 1200.00 and if there is no leak, we will pay. Until the tank is pulled and a leak discovered, the process is technically a 'voluntary pull.' If there is a leak, Proguard pays for the pull. Pierson Environmental did the pull. I asked them to come out and do a site visit before I accepted their estimate for the job, 1200.00, because the tank is so close to our neighbor's property. When Pierson originally sent an estimate, 1200.00, before the site visit, the paperwork stated that if their heavy equipment caused damage to underground pipes, etc., they would not be responsible, especially if they had not been apprised of the location of the pipes. (I'm not wording this exactly right but all of these companies have the same legal, 'not our fault.') They also mentioned wanting 9 feet around the tank for their equipment. That put us right into our neighbor's house, hence my call to them to make a site visit before providing an estimate. Also I called the woman at the oil company who was walking me through this and expressed my concerns about involving the neighbors and she calmed me down and called Pierson to make sure they would not go onto my neighbor's lawn.

Anyway, if the pull had resulted in a tank that did not have a leak, it would have cost us 3400.00 plus fixing the driveway. By the way, the driveway was only disturbed in a 2-3 foot by 3 foot area, much smaller than I had imagined. However, there is a leak so presumably Proguard and USAA will pay, except for our 1K deductible from Proguard. I have not been told whether there is a deductible for USAA on this. I'll find out after they do soil samples and figure third party involvement.

Oil that was in the underground tank was not worth the expense of trying to save, mostly sludge.

Right now tank is on our front lawn. It had to be inspected and will be taken away by Pierson. Soil samples are scheduled.

I am happy to have it out.

Will our premiums go up? I don't know. I didn't ask. I would think that if the reason for the claim no longer exists, it should not go up since it can't happen again, but not sure.

Proguard offers insurance for above ground oil tanks. It costs less than insurance for underground. Haven't decided whether to buy it. At least we'll save money no longer paying for insurance for the underground tank. I think it was approx. 200.00/yr.