Does Farm Insurance Cover Oil Spills From Tanks?

An oil spill is disastrously harmful for any farm – but will your farm insurance cover the damage if third party property is involved?

Yes – all farm insurance policies cover damage to third parties or third party property. Oil spills can cause significant environmental damage, so insurance for this risk is a must.

But you need to bear in mind that standard farm insurance only covers third parties, not your own farm.

In this article, we’ll cover the following questions:

• What is environmental liability cover?
• Why is an oil spill dangerous?
• How can I avoid oil spills on my farm?

Farming involves working with many hazardous materials, including oil. Read on to find out more about how an oil spill may affect your insurance.

What is environmental liability cover?

Farm insurance provides protection for damage as a result of pollution in various forms. Most often your own farm is the property affected most by oil spills and leaks, but standard farm insurance will cover third parties or third party property only.

If you want to cover the clean-up cost for your own soil following an oil or kerosene spillage, you will need extra insurance. We only deal in farm insurance policies that cover environmental damage resulting from a chemical or pollutant hazard, but at present, only one insurance company – Axa – covers the damage to your land as well as third party land, lakes and rivers.

The technical name for environmental insurance is Environmental Impairment Liability (EIL) insurance. This is the part of your policy responsible for covering the costs relating to an incident of pollution on your farm. It protects your business against claims, but it also protects the environment from unnecessary harm.

EIL insurance can cover you for risks such as:

• Environment Agency clean-up costs
• Any damages that you are ordered to pay from impacted businesses or individuals
• The cost of defending your claim
• Claims arising from environmental impairment

You may be able to find cover that protects you from a date in the past, even if you had prior cover from another insurer. This gives you more comprehensive protection in the event of a gradual oil spill.

Why is an oil spill dangerous?

Pollution via an oil spill can have devastating effects on a farm. Oil leaves a thin, viscous trace over virtually anything it touches, blocking oxygen and harming wildlife and insects. As spilled oil on land prevents water absorption by the soil, spills on agricultural locations or grassland have the effect of choking off plant life. Obviously, this is disastrous to crops.

If a spill occurs in these environments, the highest response priorities are to prevent oil from leaching into groundwater or entering waterways as run-off, and to return the soil to productive use as quickly as possible. This is because when oil reaches the surface of water it blocks oxygen from circulating and killing wildlife and algae that live within it.

Trenches can be used to contain the spill, as long as their use does not allow the oil to leach into the soil. In locations where there is no danger to the water table, the contaminated area can be flooded. Oil is lighter than water, so it “floats” the oil over the water’s surface for recovery via vacuums and skimmers. Other possible techniques include mechanical removal of contaminated soil, or in-situ burning.

How can I avoid oil spills on my farm?

If you use oil on your farm, you need to store and move it safely as with all other hazardous materials. Implementing spill prevention measures will satisfy the terms of your insurance policy and help avoid a leak occurring.

Firstly, and most importantly, use containers suitable for the oil stored. For example, use a container designed for flammable liquids to store gasoline. Make sure the container is large enough, stable, and housed within a suitable structure if necessary. Never overfill these containers – use a high-level alarm or audible vent to alert you to overfilling.

Identify contractors or other local experts who can help you clean up an oil spill if needs be. A speedy response can really mitigate the damage an oil spill can cause.

Provide effective secondary containment for discharge when you transfer oil to and from containers and mobile refuelers. Use absorbent materials and drip pans to catch any miniature spills.

Prevention is better than a cure, but when neither works you need solid insurance to cover the costs of a clean up. Get in touch and we can help organise farm insurance for your business.