So, you have a buried oil tank on your property, and you think “If it leaks I will be OK, my home insurance company will cover it!” Unfortunately, that is almost NEVER the case. There is simply no such thing as heating oil tank insurance.
Most people do not realize that many home insurance companies will not cover anything to do with underground tanks. There are a few companies out there that will be exceptions, but by and large if you read through the policy, there is likely an exclusion for any underground heating oil or gasoline tanks. This includes if the tank has leaked.
Most heating oil tanks have a lifespan of 20 years, so if yours is older than that or it is no longer in use it needs to be removed, ideally before it starts to leak. A normal tank removal is a straightforward process, even if the tank has leaked. However, it will end up costing more money to remediate the contaminated soil, and you will have to pay for those costs. That is, unless you have a special rider on the insurance plan that is specifically for the heating oil tank and/or the cleanup of contaminated soil. Some companies offer you additional coverage for these types of things. There are even some insurance companies you can deal with directly that specialize in heating oil tanks, but that is a separate policy and a separate company from your home insurance policy. They would cover just the tank and or any leaks, and if the need arises, you pay the deductible and they would cover the rest.
The good thing is that in Maryland, there is an MDE Homeowner Reimbursement Fund, so even if you do not have a special policy to cover the oil tank and or leak cleanup the state will reimburse you the cost for out of pocket expenses, minus a $500 deductible. Bear in mind it is a reimbursement fund, so you have to pay the contractor and carry the cost initially. It can sometimes be a long time before you get the money back, but it is better than nothing, so at least you know the money will eventually come back.
If your tank is aboveground, insurance companies will not cover the cost of removing an old tank and installing a new one. However, if the tank leaked and there is contaminated soil on your property or your neighbor’s, some insurance companies will pay for this. Especially since you are dealing with a neighbor and a 3rd party; they want to cover you for the damage.
Many people do not realize that when an aboveground tank leaks it can be just as damaging and costly to clean up if not more costly than an underground tank. So, the bottom line is do not wait, if you have a heating oil tank that is 20 years or older, it is time to get it removed and replaced.