Thirty Year Tanks: Missouri Tank Insurance Study

The years immediately following publication of the 1988 federal underground storage tank (UST) regulations saw the replacement of large numbers of leaking and suspect USTs across the U.S. This development was a natural outcome of the regulations’ design, construction, installation and related standards for the nation’s regulated tank systems, as well as the financial accountability requirements imposed on tank owners.

As those once-new tanks approach 30 years of service, owners, installers, contractors, remediation firms and regulators are facing increasingly complicated questions. Are these now-aging tanks still sufficiently protective of human life and the environment? Are they insurable? What, if anything, do manufacturers’ warranties suggest about the tanks’ near- and long-term integrity?

A recent study from the Missouri Petroleum Storage Tank Insurance Fund (PSTIF) illustrates one state’s attempts to understand and address today’s aging USTs.

The Missouri General Assembly established the PSTIF in 1989 to help the state’s tank owners meet federal and state financial responsibility requirements. In 1992, the PSTIF began offering tank owners insurance coverage for the costs associated with UST leaks and spills.

To help legislators gauge the ongoing need for the program, state law requires that the PSTIF report every two years on the availability and affordability of commercial insurance as an alternative for tank owners to meet their financial responsibility obligations.

The most recent report was released by PSTIF on Jan. 23. The 224-page study reveals that as of June 30, 2017, 50.6 percent (3,406) of the 6,731 USTs insured by the PSTIF are 25 or more years old or of unknown age. The aboveground storage tank (AST) population is only slightly younger: 42.4 percent (1,342) of the 3,162 PSTIF-covered ASTs are 25 or more years old or of unknown age.

Commercial insurers participating in the 2018 study reported they are willing to cover older tanks; however, before doing so, many providers undertake site-specific analyses to help quantify their risks. These steps often include:
• Physical inspection of the tank
• Sophisticated tank integrity tests
• Environmental site assessments
• Review of claims and remediation histories.

Based on these evaluations, the insurers decide whether and on what terms they will insure the tank. When coverage is offered, commercial insurance policies for older tanks often carry higher premiums, higher deductibles or both. In some cases, the insurer will condition coverage on the tank owner’s agreement to undertake maintenance, repair or remediation activities.

Taking all of these findings together, the study’s authors reach two basic conclusions:
1. Commercial insurance likely would be available for all tank owners and operators in the state.
2. That insurance, however, might not be affordable for older tank systems, particularly those with tanks that are 25 or more years old.

Missouri’s conclusions might not be mirrored in every state. But the PSTIF is asking the questions every state will soon have to answer.

PEI TulsaLetter, "Missouri Tank Insurance Study." February 28, 2018, Petroleum Equipment Institute, pei.org.

For more information about the testing of your USTs, visit tanknology.com.