With nearly 558,000 underground storage tanks housing petroleum and other hazardous substances across the country, a significant threat to the environment can arise. Due to these intense threats, it is crucial to have proper insurance coverage protecting you from any danger that may present itself in the future. In this blog, we review the local and federal standards while also discussing appropriate insurance coverage options for your underground storage tank.
What is an Underground Storage Tank (UST)?
Many people may ask, what is an underground storage tank? According to the United States Environmental Protection Agency (EPA), a UST is “a tank and any underground piping connected to the tank that has at least 10 percent of its combined volume underground.” It is essential to note that underground storage tanks can be held to strict regulation from the local and federal government that the owner must meet.
What Regulations are Required for Underground Storage Tanks?
Not all UST’s are required to meet federal EPA regulations. However, the tanks required to meet the regulations are expected to meet the following requirements:
- Technical Requirements: These requirements are designed to reduce the chance of releases from tanks, detect leaks and spills, and secure a prompt clean up.
- Financial Responsibility Regulations: These regulations were designed to ensure the owner or operator will have the resources necessary for any costs associated with cleaning up releases and compensating third parties involved.
- State Program Approval Objectives: This allows state programs to function instead of the federal program, but states must meet specific regulations to get their program approved.
Do I Need Insurance for an Underground Storage Tank?
Financial responsibility of underground storage tanks can be dealt numerous ways including: the financial test of self-insurance, the corporate guarantee, surety bonds, irrevocable standby letters of credit and many more (while state funds and insurance are most often used).
Insurance policies for underground storage tanks provide coverage for specific damages, injuries, or losses. If you, the homeowner or the commercial tank owner, own the UST and are not covered by any state funds, purchasing environmental insurance is likely your next best choice.
However, not all insurance agencies specialize in pollution or environmental insurance, but there are many companies who offer those specializations and can assist in providing policies that comply with the financial responsibility requirements. Companies who do not offer pollution or environmental policies can still assist in finding a combination of policies that will meet all regulations.
Owner Responsibilities
The owner or operator of the tank must take responsibility for many tasks in maintaining the UST under the state and federal regulations. They must complete the following:
- Select an eligible insurer
- Purchase the proper amount of insurance
- Obtain a properly worded endorsement
- Keep track of all records
- Maintain coverage from year to year
- Obtain alternate assurance If the insure decides to cancel or is no longer eligible
- Report failure to obtain alternate assurance
- Submit financial responsibility documents
Underground storage tanks can be difficult to understand if you are new to the industry. If you’re interested in learning more about underground tank storage, feel free to contact us at TJ Woods. We are always here to help with all your insurance needs at affordable costs.
