Oil Tank Insurance: Are You Covered?

By: Ben Cavallo, CIC, AAI, CISR

Together with partner Keith Signoriello, Ben Cavallo is the principal and co-owner of C&S Insurance.

homeowners insurance oil tank leak

If you have an oil tank in your house or on your property, it’s most likely not covered by your home insurance. If there is a spill or a leak, it can be extremely costly to fix, especially if environmental cleanup is needed. For a real-world example of just how costly an oil spill or leak can be, consider the oil spill in January 2022 at the home of a young couple in Wareham, MA.

The couple wasn’t aware that their insurance didn’t cover oil spills and, ultimately, had to rely on a GoFundMe fundraising page started by a friend to help pay for costs. After a legal battle, their insurance company reversed its decision and extended the couple’s policy to include the leak.

This post will walk you through what home heating oil tank insurance is, what it covers, how much it costs, and much more. Keep reading to learn how to protect your home with this important coverage.

What Is Oil Tank Insurance?
What Causes Home Oil Leaks?
What Are the Risks Associated With Oil Damage?
Do You Need Oil Tank Insurance?
What Does Oil Tank Insurance Cover?
How Much Does Oil Tank Insurance Cost?
How Can I Prevent a Home Oil Tank Leak?
Secure Your Coverage
Frequently Asked Questions

What Is Oil Tank Insurance?

Oil tank insurance, also called escaped liquid fuel endorsement or oil remediation insurance, is a homeowners’ insurance policy add-on that helps cover the cost of oil leaks or spills. Oil leaks can also cause fires or environmental hazards such as ground contamination, which can significantly drive up costs.

The story about the Wareham homeowners isn’t an isolated incident. Many homeowners are unaware that their homeowner’s policy does not include oil spill coverage and find themselves in this unfortunate situation. According to WGBH News, between 100 and 200 uninsured home heating oil spills are reported to the Massachusetts Department of Environmental Protection every year. Only spills over 10 gallons are required to be reported, so this number may be higher.

What Causes Home Oil Leaks?

There are a variety of situations that could cause home oil leaks. Here are a few examples:

  • Improper installations
  • Overuse
  • Corrosion or rust on the inside or outside of the tank
  • Ruptured oil lines
  • External damage to the tank (Ex. a tree falls on the tank)

What Are the Risks Associated With Oil Damage?

There are a variety of risks associated with oil damage, including:

  • Soil or water contamination: Oil can quickly seep into the soil and potentially contaminate water sources.
  • Fires: Oil is highly flammable, and any oil spill should be reported to the local fire department immediately.
  • Financial risks: As stated in the WGBH article linked above, oil spill cleanup costs typically cost $100,000 to $200,000.
  • Health issues: Prolonged exposure to oil vapor can result in dizziness, loss of coordination, nausea, headaches, disorientation, and other concerning symptoms.

Do You Need Oil Tank Insurance?

If there is an oil tank in your home, you need oil tank insurance. It may not be legally required, but an oil tank issue can be extremely costly if not covered. Even new tanks can rust from the inside and leak with no warning.

What Does Oil Tank Insurance Cover?

Coverage will vary depending on the insurance carrier, but here are some common situations that oil tank insurance will cover:

  • Loss or damages from oil tank spills and leaks
  • Cleaning and decontamination of property (up to $200,000)
  • Cost to repair or replace damaged oil tank

How Much Does Oil Tank Insurance Cost?

Oil tank insurance costs will vary by location and the home’s value, but most coverage runs between $50 and $75 per year.

The typical coverage limit on an oil tank insurance endorsement is around $100,000. Coverage can get complicated because any liability around an oil tank spillage, such as the spill seeping into a neighbor’s yard, may be covered by a home insurance policy. Additionally, some companies will exclude all pollution coverage or may only offer a minimum liability limit.

The biggest roadblock in securing oil tank insurance is not getting an inspection certificate. To qualify for home heating oil tank insurance, a homeowner must have a certificate filled out and signed by an oil technician that states that the system is up to date and that the line that connects the tank to the furnace is safely enclosed. Some insurance agencies, such as C&S, will help homeowners secure their certificates.

How Can I Prevent a Home Oil Tank Leak?

Here are some tips to help prevent an oil tank leak:

  • Get annual inspections
  • Replace your oil tank every 10–20 years
  • Keep an eye out for rust or corrosion
  • At the first sign of a leak, call the fire department
  • Protect oil tank lines

Secure Your Coverage

C&S Insurance can help you with all of your insurance needs, including oil tank insurance. We’re a family-owned, local agency with a large access pool of coverage options. Our knowledgeable agents have experience in the industry and have been working with oil tank insurance coverage since the policy was created. We’re here to support you in every step of the process, from researching coverage options to filing the inspection certificate, to securing your endorsement, and beyond.

Reach out today with any questions or interested in securing oil tank insurance coverage.

Frequently Asked Questions

Q: Are oil tanks covered by homeowners’ insurance?
A: Oil tank spills from corrosion or rust are not covered by homeowners’ insurance. However, if there was a fire on the property that damaged the oil tank, the damage from the spill would be covered. In that situation, the fire is the covered peril and would encompass any oil damage.

Q: What is oil tank insurance?
A: Oil tank insurance is a homeowners’ insurance endorsement that protects homeowners from exorbitant costs of oil spill remediation and cleanup.

Q: Do I need oil tank testing?
A: Yes, frequent oil tank testing and maintenance will ensure that your tank is in good shape and will strongly diminish the chances of a spill.

Q: Do I really need that certificate filled out?
A: Yes, if you don’t have the certificate filled out by a certified oil tank technician, you cannot apply for oil tank insurance coverage.

Q: How much does oil tank insurance cost? 
A: The cost of oil tank insurance varies, but it typically costs between $50 and $75 per year.

Q: How do I know if I have an oil tank in my house?
A: If your house is heated by oil, you have an oil tank in or near your house and need oil tank insurance.