The facts

A business owner operated a gas station that offered several types of fuel products. It was situated in a remote area near a large body of water.

The business owner had regular pressure testing performed on the fuel systems at the gas station and also maintained an inventory reconciliation showing purchases and sales of fuel. However, the inventory reconciliation showed a slight increase in the shrinkage of fuel over time. As a result, the owner arranged for further testing of the storage tank system to investigate the fuel shrinkage. The test revealed that one of the scheduled underground storage tank supply lines was leaking at a connection, therefore proving a release. 

An excavation was undertaken and revealed that an area of fuel saturation existed directly below a joint in the line between the tank and the pump. In addition, a soil analysis and further excavation revealed that the fuel had migrated down and pooled below the tank itself.

The result

The business owner’s Environmental Cleanup and Liability Insurance for Storage Tanks policy, provided by Victor, paid to investigate the extent of contamination subsequent to the confirmed release, and included costs associated with environmental technical experts to conduct tests and assess the site. Moreover, the policy provided coverage for co-ordinating with environmental civil authorities to oversee the remediation. 

The total cost of the claim to investigateand remediate the environmental incident was approximately $350,000.

Risk factors

Risk factor #1

An approved automatic leak detection system installed on all underground storage tank systems could have warned the business owner of a release earlier and reduced the costs associated with confirming a release. Some of the most common automatic leak detection methods and components are:

• Electronic in-tank leak detection; 

• Monthly statistical inventory reconciliation (SIR); 

• Secondary containment monitoring (interstitial); and

• Electronic line leak detection (ELLD).

Risk factor #2

The costs to investigate and remediate a remote location facility are typically subject to higher claims costs when the location is far removed from urban centres. This is due to the costs associated with bringing in the appropriate parties to assess the claim (adjusters, environmental consultants and contractors).

*This claim scenario is for illustrative purposes only. Please remember that only the insurance policy can give actual terms, coverage, amounts, conditions and exclusions.