Insurance Insurance

How to Ensure Your Insurance Covers Oil Spills

    Check your Policy

    • 1). Check your current insurance coverage to find out if it gives you any protection against oil spills, regardless of their origin. The Prince Edward Island Guardian newspaper reported that nearly all local homeowners aren't insured for oil tank spills, but the majority think they are (see Reference 3).

    • 2). Review the comprehensive or liability section of your policy. If you didn't ask specifically for oil spill coverage, this is where you may be covered.

    • 3). Talk to your broker to see what exactly your policy covers and for how much of the restoration, recovery, reimbursement or replacement costs. Increase the coverage if needed.

    Get Covered

    • 1). Search for policies with the widest range of events possible to ensure coverage in an oil disaster. Damage to your boat or home is coverable, but beaches are not since they are normally common property.

    • 2). Steer clear of narrow definitions or restrictions that could reduce your coverage and increase your liability, making you pay a bigger percentage of the damage costs. According to Turner, less expensive broad or named perils policies don't cover oil spills.

    • 3). Look for companies that have clear policies and ask questions until you understand exactly what you are getting and where it is specified in writing in the policy.

    What You Need

    • 1). Research the damage an oil spill in your area can cause. Spills on water differ from spills on highways or underground leaks and affect property owners differently. The government of Newfoundland and Labrador says 20 percent of annual oil spills are from domestic fuel tanks and clean up can cost $5,000 for a common spill or more than $150,000 for a large one. (reference 2)

    • 2). Make a list of insurance companies that offer coverage of the possible dangers from oil spills in your area and the damages they cause. Compare the policies and coverage first, then premium costs, to determine the one that is best for you.

    • 3). Look for coverage over an extended period of time after any spill. Oil can take time to spread and cause damage, depending on the location and type of leak.

    Cost

    • 1). Buy coverage that specifically includes the major damages you face.

    • 2). Consider more than just oil spill insurance. In cases like groundwater contamination or pollution of neighboring properties, you will need liability insurance.

    • 3). Don't penny-pinch. Cheaper policies can leave you footing a larger part of the repairs yourself and wipe out any savings on premiums.

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