American Risk Management Resources Network, LLC Issue #28

Tank owners and operators need to begin moving away from tax funded programs for proof of financial responsibility regardless if their state program is solvent. Program Restrictions Very few tank owners and operators that carry financial responsibility through state tank funds are aware of how restrictive the coverage is. For example, only “thirty-five states have funds that pay for either new and/or past releases, according to the EPA. Arizona, Connecticut, Florida and Wisconsin have funds that pay for past releases only. Given the volatile economic conditions of recent years and the impact on tax revenues, some states are looking to dissolve their funds. Among the states, California will stop accepting new claims for its UST Cleanup Fund at the end of 2015. The cost if a leaky tank is increasing. In California, the average cost of a closed claim was about $180,000 as of January 2013, but the state Water Board estimated that current claims were averaging $500,000 with a projected total of $750,000 per claim. Texas ended its petroleum storage tank remediation fund and stopped making new reimbursements in September 2012.

Regulations set forth by the EPA in 1988 are being amending to update testing standards and tank construction. While this is occurring, several states are beginning to reduce tax funded state tank fund programs. These changes will greatly impact tank owners and operators in 2015. Originally, the EPA sought to reduce the occurrence of spills by addressing common precursors to leaks such as age, construction and size. In addition, financial responsibility was made mandatory for owners and operators. Today, the EPA is working proactively to expand its prior requirements to include all tanks to have double walled construction, replace piping to double walled, and require more frequent inspections of underground storage tanks (USTs) and above ground storage tanks (ASTs). Owners and operators will still be required to show financial responsibility for $1 Million dollars. Financial responsibility (FR) can be shown in several ways. The most common are state tank funds and private insurance. Many states this year are absolving their tank programs. This is due to insolvency within the program or planned legislation.

The Need For Underground & Aboveground Storage Tank Insurance Has Never Been Greater!

January 2015

New Financial and Regulatory Requirements for Tank Owners and Operators in 2015 By Angela Oroian– Tank Insurance Specialist

WWW. ARMR.NET

608-824-3340 | Angela@armr.net

Contact Us Today!

New EPA Requirements Program Restrictions Insuring Older Tanks Dangers of Non-Compliance

IN THIS ISSUE

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State Tank Funds are not as good as private insurance coverage in almost all cases!

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Since this discovery, all certificate holders of the insurance agency were listed as noncompliant. Being in noncompliance with the EPA and state can have devastating effects for insureds that may result in shutting down operations and fined daily until compliant. Many holders of these fraudulent certificates were “shut down until the owner or operator complied with the law.” It is cases like this that display the importance of proper insurance and why extensive information is necessary for underwriting old tanks. Read more on the outcome of the case in Michigan here:- http://www.lansingstatejournal.com/

story/news/local/2014/12/01/underground-storage-tanks/19757367/ ARMR TANK SOLUTIONS| We have the best markets for UST/AST policies! What to do if you have a client with older tanks: Placing insurance on tanks older than 20+years is a challenge but not impossible. Several options are available to owners and operators that meet the EPA and State financial responsibility requirements. It is important to let your insured know that Tank pollution liability operates like term life insurance. The older the tank the greater the insurance premium. Therefore, in some cases it would be more cost effective for the owner to replace the tanks. The benefit of having older tanks replaced is the premium for new tanks decreases immensely, these new tanks should meet the new EPA requirements and usually fall into minimum premium ~$500.00 Tank removal however, is sometimes not an option for tank owners and operators. In this case, there are private insurance markets that do write older/riskier tanks. In underwriting however, older tanks are automatically viewed as high risk until sufficient information is obtained. Tanks typically only last for 30 years, so older tanks require more detailed examination.

force to reduce the likelihood of leaks from tanks that can potentially impact the soil and ground water. Obtaining insurance for older tanks can be quite difficult and often reflect higher premiums than owners and operators want to pay. However, proper certificates and coverage for older tanks is crucial to your insured’s business. Trying to appease the insured with savings and provide compliant proof of financial responsibility, can leave any agent scrambling for alternative solutions. Recently, two Lansing Michigan insurance agents pleaded guilty to providing fraudulent noncompliant tank certificates.

“The fake document scheme, operated from 2011 to 2013, mostly involved gas stations with underground tanks that were uninsurable due to age or condition or were more expensive to insure than owners were willing to pay.” These certificates were made to appear like owners and operators of tanks were in compliance with EPA and State regulations.

Connecticut is phasing out its program under legislation passed in 2012 after being challenged by funding issues. The states that have no fund to provide the federally required proof of financial responsibility coverage include New Jersey and Washington.” (ACETANK Safe, 2015). It is important to mention that not all storage tanks require proof of financial responsibility. For example, tanks less than 1,100 gallons are not subject to EPA requirements. However this is beginning to change as requirements by individual states change. For example, Florida, Virginia, Delaware and New Mexico, now require aboveground storage tanks, inclusive of day tanks, to maintain some sort of financial assurance (ACETANK Safe, 2015, www.epa.gov). As tank owners and operators deal with these regulatory and financial changes private insurance will be even more crucial in 2015. Call ARMR Today to ensure your coverage not only meets these new financial and legal requirements but is also protecting their business! 608-824-3340 Insuring Owner and Operators with Older Tanks The EPA and each state has strict regulations for owners and operators of tanks to provide proof of financial responsibility. These regulations are in

American Risk Management Resources Network, LLC

7780 Elmwood Ave, Suite 130 Middleton, WI 53526 608-836-9590

Interested in getting a quote? We make it easy! Items needed- Completed, signed and dated application including FEIN#- HERE

Expiring policy Dec Page (Retro Dates)

Site Loss Response Plan

The past 6 months of monthly inspection checklists for all covered AST and or UST systems

Copies of tank and line tightness tests

Copies of cathodic protection tests- if testing is in place -The more information provided the more reflective the premium will be of the risk

Call Angela Dybdahl Oroian at 608-824-3340 or email Angela@armr.net

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