The State of New Jersey
NJ Department of Banking and Insurance
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Information Regarding Oil Tanks


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.

 
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New Jersey Department of Banking and Insurance