Companies and homeowners dealing with the handling of fuels need to ensure that they are properly covered. Governments have begun to tighten their grip on making sure fuel spills do not occur because they can severely damage the environment and ecosystem around them. In a push towards green energy, it is not uncommon to see more restrictions and higher fines if a fuel spill is found from your business. Oftentimes, these mistakes happen without notice or due to some sort of negligence from a business or owner. When these accidents happen, having the right insurance coverage and proper fuel operations and maintenance methods can make or break the bottom line of your business. For homeowners, oil spillage is usually not covered by their insurance. However, some insurance companies will sell you oil damage insurance if you have a properly certified fuel tank.
Homeowner Risks to Fuel Spillage
Homeowners that use oil for heating must ensure that their storage tank is properly installed and the right material. A leaking tank can be a major liability that leads to massive clean up costs, and not all insurance companies will cover them. Current standards in the first world require that homeowners have a tank that has two walls and an inner liner of plastic. Steel tanks can have major rusting problems over time and might be prone to pitting corrosion. Therefore, it is more advisable to use tanks made out of polyethylene tanks that have lockable lids and fuel nozzles. Experts advise that Able poly fuel tanks meet these criteria, in addition, to being rigid and lightweight. Experts say that fuel tanks sit on a solid concrete foundation and are bolted down accordingly to resist sliding forces from high wind or earthquakes. Industrial type tanks usually have a robust design that is not prone to abrasive surfaces and wears. Tanks should be supplied with electric fuel pumps so that spillage is avoided when pumping out the fuel.
Costs and Maintenance Tips for Homeowners
The Insurance Bureau of Canada estimates that oil tank spills from homeowners can have average cleanup costs ranging between CAD $250,000 to $500,000. One liter of leaked oil can potentially contaminate one million liters of water. Thus, as a homeowner, it is your responsibility to properly maintain your oil tank by either replacing it or its supply lines, removing contaminated soil around the home, or fully replacing your home’s foundation. Other tank maintenance tips include to regularly inspect it for signs of rust, hire a licenses oil distributor to do a visual inspection of your tank, ensure all tank lines are protected from people or animals, ensure connections and lines are kept clear of snow or ice, provide proper shielding around your tank and keep the roof of it clear of snow, ice or other heavy objects.
Oil Spill Liabilities for Large Corporations
Oil spill liabilities in Australia take the position that the companies that pollute have to pay for the cleanup cost. This includes oil spills from ships and offshore petroleum facilities. There are no statutory limits on the liability for oil companies that have to clean or remediate the effects of major oil spills from any type of production. Penalties for minor spills can be around AU$ 11,000 on top of covering all cleanup and remediation costs. Additionally, a strict liability also applies to breach approved environmental regulations, and penalties are set at around AU$ 8,000. Offenders can also get hit with liabilities from third parties under tort laws for economic laws.
Insurance Liability Limits for Large Corporations
In Australia, the OPGGS Act requires a permit, lease, or license to operate an offshore petroleum facility and maintain the proper insurance that will protect against expenses or other liabilities that can arise as a result of this type of activity. This would include insurance that covers clean-up and remediation in case of a fuel spill. The standard practice in the offshore petroleum industry in Australia is to hold insurance covering liabilities in the range of US $100 to $300 million. The specific coverage amount is set by expert assessments conducted by the insurer and the underwriter at the expense of the owner. However, different government agencies have the authority to challenge insurance liability amounts if they are too low and order companies to obtain higher liability limits.
Government Cost Recovery Legislation for Large Corporations
To assist with making sure businesses meet all costs that can be associated with oil spill cleanups and remediation work, the oil industry in Australia has established the Australian Marine Oil Spill Centre (AMOSC). The AMOSC collects fees from all companies associated with oil exploration so that it can stockpile the proper response equipment and expertise if an actual spill does occur. If, for example, a ship has an oil spill and cannot pay in full, the government has set up legislation in place to make other arrangements to recover the total cost plus compensation. This is done on a case by case basis. If a company is ordered to go through with cleanup and they fail to pay or do so, it would affect their ability to gain petroleum or oil explorations access in Australian territory.
In summary, home insurance policies do not typically cover loss or damage of property due to oil spills. But in some cases liability coverage may cover homeowners when unintentional oil spills that contaminate the property and its surroundings. For industrial oil spills, businesses should do a proper assessment of the costs that it would take to clear oil spills according to a worst-case scenario. Businesses then need to insure themselves properly and have the appropriate liability policy that will cover the majority of the oil cleanup costs, including site remediation. If business owners do not have liability insurance, they can face serious fines, including third-party liability claims from other businesses or industries affected as a result of the oil spill. Businesses can also risk the loss of their operational license if they are caught without proper insurance. Most governments collect annual taxes and levies from businesses that are determined to be high risk in terms of causing severe environmental damages from oil spills, such as oil exploration drilling, oil shipping, and offshore petroleum facilities.
