By Michelle Huitt-Megela, Assistant Vice President

As we wrap up hurricane season, we have begun to review an underserved community when it comes to Commercials Storage Tank Coverage:  Municipalities. Because most municipalities operate independently (although some activities are shared among municipalities), the operations that they oversee or conduct vary. But they all most certainly house storage tanks to keep them running smoothly.

Operations associated with a municipality risk:

  • Court Houses
  • Sheriff’s Office
  • Fueling Stations
  • Mosquito Control Office
  • Emergency Response Centers
  • School Districts
  • City Bus Terminals

Many of these locations have a Commercial Storage tank on site for various reasons such as heating, backing up generators, and fueling company vehicles. In some instances, these tanks are vital to their day to day operations and are typically aboveground tanks which in most states do not require the owner/operator to provide Financial Assurance in the event of a leak. There are a few states that require aboveground tanks over 550 gallons to provide Financial Assurance but in the states where this is not required, a catastrophic loss could put a significant strain on a municipality’s budget.

A back up generator can be a municipality’s life line in the event of a catastrophic loss. For law enforcement related risk and emergency response centers, it can mean the ability to continue serving the community and for schools generators can help when they are converted to shelters and minimize the amount of down time a school will encounter after the storm.

Private insurance for these risks can respond not only for the clean up of the insured’s property but for 3rd party claims as well. Both underground and aboveground tanks are at risk during hurricane season from flooding and winds that can cause a leak or degrade the integrity of the tank itself and its ancillary equipment. Proper annual inspections and testing are always a good idea, but are essential after a catastrophic storm. In addition to testing and inspecting the tanks, the pumps and all leak detection devises should also be checked to insure they are still in working order.

If a leak does occur from one of these tanks or its equipment, private insurance can provide the resources to clean up both 1st and 3rd party property affected as well as provide Bodily Injury and Defense coverage. Rapid response to a leak is essential to minimizing the affects to both the environment and the economic loss sustained by the risk.

For more information on storage tank coverage for municipalities or to discuss a specific account, please contact us.

Check out some claim scenarios involving storage tanks (and other pollution incidents) for municipalities:

A Wastewater Treatment Plant had been operating for over 20 years and had been upgraded periodically. In spite of site upgrades, there were a number of areas at the site that had previously been used to dispose of waste such as clarifier sludge into surface impoundments. Waste from these impoundments contaminated the groundwater at the site which was used to recharge the local aquifer. The cost to the municipality for cleanup of the groundwater, public notifications, and emergency water supplies was over $500,000.

A municipal school district had been disposing of laboratory waste in a 20,000 gallon underground storage tank for years. The tank eventually ruptured and contaminated the surrounding soil and groundwater. The chemicals from the tank found their way into local drinking water wells and a nearby reservoir. Third parties sued the university and claims were over $400,000. The costs to clean up the reservoir exceeded $1,000,000.

The Environmental Protection Agency (EPA) charged a municipality with violation of the Clean Water Act (CWA). The violations had been reported between 2002 and 2006 at the city’s wastewater treatment plant. The EPA lawsuit alleged that the discharge included fecal coliform, E. coli, and suspended solids that exceed federal limits. As part of a settlement agreement reached in this suit, the city agreed to pay the EPA $10,000 to resolve the allegations.

A public library was going to be built on land owned by a municipality. As construction commenced, several old underground storage tanks were discovered, some of which had leaked into the surrounding soil. The contamination had to be remediated prior to the library being built at a cost of over $1 million to the municipality.

A farmer was awarded over $100,000 from a municipality as a result of damages he claimed were caused by the municipality’s use of road salt. The farmer alleged that his farmland had deteriorated from the road salt that had been used for local road maintenance.

A recycling facility had to pay over $850,000 in fines and penalties after an investigation by the Toxic Substances Control (DTSC’s) Office of Criminal Investigation. The DTSC alleged that the facility released fibrous material into the air which deposited on neighboring properties. The fibrous material contained cadmium, copper, lead, and zinc at levels that exceed hazardous waste regulatory standards. In addition to the fines and penalties, the facility has been ordered to upgrade their recycling operations and train personnel.

While the coverages we offer are designed to address these general issues, we make no guarantee or warranty that any individual policy we offer will respond to all issues as described herein. Please refer to the actual policy wording in each offered form to determine coverage applicability and acceptability. In the event you apply for coverage and we offer terms, please review those terms carefully to determine if all the exposures are being addressed. In some instances, more than one policy or type of coverage may be necessary.