Oil Tank Home Insurance in Canada: Buried Tanks, Leaks and Cleanup

Often yes, but it depends on the tank. Many insurers will consider a home with an above-ground tank that is in good shape and has been inspected. A buried (underground) tank is a harder case: some insurers decline the home, some restrict coverage, and some ask you to remove the tank first. The rules vary by insurer and by address, so the reliable step is to tell a broker about the tank before you apply or renew.

The reason is simple. A leaking tank can contaminate soil and water, and a standard home policy is built around damage to the house, not around cleaning up the ground. This guide explains the difference between tank types, what a spill can involve, what each province's rules point to, and what to say when you buy a house that has one.

Heating oil tanks sit in three common places, and insurers treat them differently:

• Inside the house (basement or utility room). A leak is easier to spot, but oil can reach the floor, drain and foundation.
• Outside, above ground. Exposed to weather, so corrosion and a damaged supply line are the usual worries.
• Buried. Leaks can run unseen for years. Older buried tanks are the ones insurers are most cautious about, and they are also the ones people forget about: an old house may still have one from before a furnace was converted to gas.

In Ontario, the Technical Standards and Safety Authority (TSSA) says an approved above-ground tank has no set replacement age as long as it is not leaking. That is a safety regulator's position; it is not an insurance rule. Your insurer may still ask for the tank's age, material, location and last inspection. The Insurance Bureau of Canada (IBC) adds that tank maintenance is the owner's responsibility and suggests regular inspections by a heating service professional.

Insurers usually give reasons like these when a tank is a problem:

• Corrosion is the main cause of spills. In an IBC study of 663 domestic oil spill claims in Atlantic Canada (2008 to 2011), over 50 per cent of spills were due to tank corrosion, and tanks of every material failed. The study is from 2012 and covers one region, so treat it as a sign of the pattern, not a current national rate.
• Cleanup can be large and open-ended. Soil removal, testing and rebuilding can cost far more than the tank. We could not find a current official national figure for the average cost of a home oil spill, so we do not quote one.
• The risk is hard to see. A buried tank cannot be inspected by looking at it.
• The owner is responsible. In Ontario, TSSA states that owners of underground tanks are responsible for the costs of maintaining, upgrading and removing them, along with cleanup.

How an insurer reacts can include: declining the risk, accepting it only after the tank is removed or replaced, accepting it with a tank inspection or age limit, or accepting it with oil spill cleanup excluded or limited. We could not find a published industry-wide rule on maximum tank age, so ask each insurer for its own requirement.

It depends on the policy wording, and it is one of the places where it pays to read the exclusions. Two separate things can be involved:

• Damage to other people's property. If oil from your tank contaminates a neighbour's yard or a waterway, your policy's personal liability coverage may respond, subject to its terms and exclusions on pollution.
• Cleanup on your own property. This is the part that is often limited or excluded on a standard policy. Some insurers offer an optional endorsement for oil leakage or environmental cleanup, with its own limit, and some do not offer one at all for certain tanks.

IBC's own advice to owners is to ask questions about your home insurance coverage and to ask the insurer about any stipulations on replacing a metal tank. Questions worth asking a broker: Is sudden leakage treated differently from gradual seepage? Is soil removal and replacement included? What is the limit for cleanup? Is the tank's age or inspection a condition of coverage? For the wider picture, see our list of what home insurance usually does not cover.

Insurance is not the only rulebook. Safety and environmental rules differ by province, and an insurer may ask for proof that you followed them.

Ontario

The TSSA regulates fuel oil tanks. It says an unused underground tank must be removed, that only a TSSA-registered petroleum contractor can remove a buried tank, and that an Environmental Assessment Report is required. Leaving a tank in the ground is possible only with a variance. If a spill happens during removal, the Ministry of the Environment's Spills Action Centre must be notified.

British Columbia

We could not open a current provincial page that sets one rule for residential heating oil tanks, and local fire departments and municipalities may add their own permit requirements, so check with your municipality. What the province does say, on its page about a 2019 home heating oil spill in Nakusp, is that the responsible person must clean up or manage the cleanup, and the Ministry of Environment may take over if that person is unknown, unable or unwilling.

Alberta

We did not find a current Alberta page that sets rules specific to home heating tanks, so confirm local requirements with your municipality or a qualified contractor. For a release, the province lists its 24-hour Energy and Environmental Response Line: 1-800-222-6514 within Alberta.

Other provinces, especially in Atlantic Canada where oil heat is common, have their own rules. If you are outside these three, ask your municipality and your heating contractor.

Taking out a tank you no longer use is often the cleanest way to deal with an insurer's concern. Points to know:

• Use a qualified contractor. In Ontario, TSSA tells owners to ask for the contractor's TSSA registration number before hiring. Elsewhere, ask what licences or certificates apply.
• Get paperwork. Keep the removal invoice, any soil test or environmental report, and any municipal or fire department sign-off. These are what an insurer or a future buyer will want to see.
• Expect contamination checks. If testing finds oil in the soil, the cleanup is a separate and larger job.
• Tell your broker when it is done. A removed tank can change what an insurer is willing to offer. We have not found any published figure for how much it changes a premium, so we do not state one. Our guide to insuring older homes lists other updates that can matter at the same time.

If you are buying your first home or any older house, do this before the closing date, not after:

1. Ask the seller in writing whether there is, or ever was, an oil tank (inside, outside or buried), and for any removal records.
2. Add it to the home inspection. Ask the inspector to look for a fill pipe, vent pipe or oil line, and consider a specialist tank scan if there is any sign of a buried tank. This is a suggestion to discuss with your inspector and lawyer.
3. Tell the broker everything. Say whether the tank is in use, its location, age and material, the last inspection date and whether any oil has ever leaked. Non-disclosure can put a claim at risk, so accuracy matters more than a quick form.
4. Get the answer in writing before you waive conditions: will the insurer cover the home as is, only after removal, or with a cleanup exclusion?
5. Talk to your lawyer about who pays if a tank is found and whether a removal can be a condition of the sale.

Some lenders also want proof of insurance before closing, so a late "no" from an insurer can delay the deal. You can read more about home insurance for owners on our site.

BlueCouch is a licensed Canadian insurance brokerage, not an insurer. A broker can ask several insurers how they treat your tank and compare the answers, including whether an oil leakage endorsement is offered at your address. You can start a quote online and a licensed BlueCouch broker follows up to confirm the details with you, or call (855) 316-3237. Questions first? Visit our FAQ.