When businesses store potentially hazardous materials, such as fuel, in on-site storage tanks, the risk of land contamination increases. This risk is particularly significant for industries like tank farms, petrol stations, transport companies, and other similar operations.
While storage tanks come with inherent risks, some of them may be mitigated through insurance.
It’s worth noting contamination can take many forms, some of which are insurable and some of which are not.
Per – and Polyfluoroalkyl substances (PFAS), a group of more than 4000 chemicals that were in the past used in a range of applications, including in firefighting foam, have received significant public attention. Many insurers now exclude cover for claims related to PFAS.
On-site storage tanks: specialist insurance
There are specialised policies for businesses that have on-site storage tanks and grease traps, with the cover offering protection for damage to the soil or property underneath the tank or grease trap caused by it leaking.
Specialist on-site storage tank insurance may provide cover for the cost of legal proceedings against the business in relation to this contamination and, in some cases, may also cover fines.
The cover may also provide protection for the cost of the clean-up and third-party property damage and injury. The policies tend to be written for the client’s specific risks and risk tolerance.
“The most common claims tend to be for petrol or diesel leaking from a tank into the soil, but claims could relate to all sorts of chemicals stored in tanks used in businesses,” explains Steadfast broker technical manager, Michael White.
“Some policies are limited to sudden and accidental situations, other policies respond to slow leaks, because it can be some time, or even years, before contamination may be found,” White says.
How on-site storage tank insurance responds to a claim
Let’s take a look at a couple of examples where specialist on-site storage tank insurance may respond.
In this first case study, assume a small service station stores diesel in an underground tank. Over time, corrosion causes a slow leak, contaminating the soil nearby. The policy may cover the costs to remediate the soil, third-party claims if the leak goes onto to a neighbouring property and legal fees if regulators issue fines for environmental violations.
In another hypothetical example, assume a storage tank containing solvent ruptures during refilling, releasing hazardous chemicals into a stormwater system. The policy may respond by funding emergency containment and disposal, covering damages if local waterways are affected and triggering government-mandated restoration.
Or in this case, let’s say a farm’s above-ground fuel tank is damaged during a storm, spilling contents into a nearby creek. The cover may pay for the costs to restore the waterway and claims from farmers downstream whose livestock are harmed.
Storage tank incidents often involve complex, costly liabilities that standard policies exclude, which is why specialist cover is vital. Importantly, on-site storage tank insurance may help safeguard cash flow by covering unpredictable expenses like emergency clean-ups or lawsuits.
For small businesses, on-site storage tank cover is about continuity because without insurance, a single tank-related incident could lead to crippling costs, reputational harm or even the closure of the business.
Talk to your Steadfast broker today to find out about how specialised policies for on-site storage tanks could protect your business.
Important notice
All information in this article is of a general nature only and does not take into account your specific objectives, financial situation or needs. It is also not financial advice, nor complete. Deductibles, exclusions and limits apply to insurance. Various insurers issue insurance and cover can differ between insurers.
Steadfast Group Ltd ACN 073 659 677
Find a Steadfast Insurance Broker near you
Important notice - Steadfast Group Limited ABN 98 073 659 677 and Steadfast Network Brokers
This article provides information rather than financial product or other advice. The content of this article, including any information contained in it, has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the information, taking these matters into account, before you act on any information. In particular, you should review the product disclosure statement for any product that the information relates to it before acquiring the product.
Information is current as at the date the article is written as specified within it but is subject to change. Steadfast Group Ltd and Steadfast Network Brokers make no representation as to the accuracy or completeness of the information. Various third parties have contributed to the production of this content. All information is subject to copyright and may not be reproduced without the prior written consent of Steadfast Group Limited.