Home Insurance in Caldwell>Question Details

Megan, Home Buyer in Caldwell, NJ

Does anyone know what insurance companies will provide coverage for homes with in-ground oil tanks?

Asked by Megan, Caldwell, NJ Wed Feb 9, 2011

My husband and I are currently in the process of purchasing a home in Caldwell that has a working in-ground oil tank. We plan to dig this up eventually, but in the meantime, we need homeowners insurance but can't seem to find anyone willing to provide coverage with an in-ground tank. Does anyone have any suggestions?

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From what I heard, insurance companies will not insure homes with in-ground oil tanks. You will have to have it removed and it will not be inexpensive. You may want to call the Department of Health and Environmental Control for the correct answer to your question and what they require.

Elfi McDonald, Real Estate Agent at Stan Smith Realty in Columbia, SC
1 vote Thank Flag Link Wed Feb 9, 2011
It is a mistake to buy a house with an in-ground oil tank. The so-called tank insurance that is commonly available frequently provides inadequate coverage if there is a real leak. A real leak can EASILY cost $200,000-$500,000 to remediate. Most tank insurance policies go "up to" $100,000, and the "up to" usually winds up being way less. Leaving you holding the bag. The cost to you could be hundreds of thousands if there is a substantial leak. All tanks evenutally will leak. True oil tank insurance that covers you in the event of a leak into an underground aquifer is virtually non-existent.

Homeowners insurance is also difficult to bind with an in-ground oil tank present. Even if you find it, you are likely to be dropped at any time, as most insurers are have dropped, are dropping, or will soon drop this coverage.

Are you working with an attorney? I am surprised that you are even considering this if you are competently represented by a real estate attorney. Most will strongly advise you against purchasing this home.

You should have the sellers remove the tank prior to closing. If they will not remove it, you should find another home without this very serious defect.

-Marc
1 vote Thank Flag Link Wed Feb 9, 2011
Megan

You must have the seller remove the tank before you close on the home. You do not want insurance, you want the home without the tank. Are you getting a mortgage? Most lenders will not lend with an underground oil tank.

Also be aware that the State may soon run out of grant money for reimbursement of the removal of an underground oil tank and more importantly the cost of remediation if there is a leak.
0 votes Thank Flag Link Sat Feb 12, 2011
.I completely agree with Jennifer - keep that oil tank on the seller's side of the equation - you've got leverage now, use it. Five years ago, as along as a tank was insured, many sales proceeded with the tank remaining in the ground. Not anymore. I always advise my buyers to make the removal of the tank, with necessary township permitting and soil testing, a condition of the sale. An above ground tank can replace the underground one. You do not want to take on the possible risk of an issue with that tank and possible soil contamination.

Recommend you discuss with your agent and attorney. The difficulty you are having with getting homeowner's insurance that covers the tank is confirmation of how times have changed.

If you are too far along in the transaction for this to be possible, chime back in and we'll try to help you further.

Good luck to you,
Jeanne Feenick
Unwavering Commitment to Service
Web Reference: http://www.feenick.com
0 votes Thank Flag Link Fri Feb 11, 2011
Megan,
Have the seller's remove the tank. There are so many reasons for this - your insurance policy only being one of the. This has been a "hot" topic for me recently...check the link below.
Jennifer
0 votes Thank Flag Link Thu Feb 10, 2011
Megan

Try ATS ENvironmental

http://www.atsenvironmental.com/tank_insurance.htm

They may be able to help you
0 votes Thank Flag Link Wed Feb 9, 2011
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