Contractors

Home Heating Oil/Gas Services

Home heating oil spills can occur under several circumstances, including overfill of storage tanks, fuel oil being pumped into an incorrect system, or an error in filling procedures. Misdelivery can also occur in the wrong location or in a home that no longer uses heating oil. These errors can result in fuel oil release that may cause significant property damage, clean-up liability, and third-party bodily injury. Accidents or leaks during transport, loading, and unloading also create significant environmental exposure. Improper disposal of spilled or removed oil, heating oil, and propane tanks containing residual gas and oil may also lead to environmental liability.

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Environmental Exposures May Include

Petroleum Product Mixtures
Leaks and Spills
Misdelivery
Vapors
Structural Damage and Contaminant Seepage
Loading and Unloading
Fuel Oil Disposal
Residual Contaminant Liabilities

Petroleum Product Mixtures

Fuel oils are petroleum products used in many types of engines, lamps, heaters, furnaces, and stoves, and they’re used as solvents. Fuel oils are mixtures of aliphatic and aromatic petroleum hydrocarbons. In addition, they may contain small amounts of nitrogen, sulfur, and other elements as additives.

Leaks and Spills

Home fuel oil spills can occur when basement storage tanks are overfilled, an attempt is made to fill a tank that has been removed, a tank has overturned in a flooded basement, or fuel oil is accidentally put into a septic tank vent or well casing. Leaks and spills can also result from delivery personnel not following proper filling procedures and not checking to fill and vent lines for obstructions.

Misdelivery

Misdelivery of fuel oil to fill a tank that has been removed in homes that have converted to propane or natural gas can pump fuel into the basement with no tank to receive it. Fuel oil can also be misdelivered to the wrong address resulting in extensive property damage and cleanup and potential third-party bodily injury liability.

Vapors

Breathing fuel oil vapors in an enclosed space like a basement can cause short-term symptoms, including nausea, dizziness, and eye, nose, or throat irritation. Getting fuel oil on the skin can cause skin irritation. Some individuals, like those with asthma or another lung disease, may be more sensitive to these effects than others. Even at low concentrations, the strong odor of fuel oil can still make many people feel ill. Long-term exposure to fuel oil odors in the home (exposure for many years) has the potential for more serious health problems. These include liver and kidney damage, increased blood pressure, other blood problems, and cancer.

Structural Damage and Contaminant Seepage

Fuel oil spills inside a basement or structure can flow through a floor drain or crack, contaminate a drinking water well, ruin a septic system, penetrate concrete blocks, create odor problems, or enter a sump system. Fuel oil that has soaked into concrete floors and wood support beams or has had time to flow into cracks or drains and get beneath floors and walls can result in extensive property damage and cleanup liability. If fuel oil seeps through cracks in the floors, drain tile systems, or sump pumps, environmental remediation may be needed, including collecting soil and groundwater samples and cleanup of contaminated soil or groundwater.

Loading and Unloading

Accidents or leaks of fuel oil during transportation and loading/unloading can be hazardous to the environment and human health. Fuel oil spills can seep into soil and groundwater, stormwater drains, sewers, and adjacent properties, damaging natural resources and posing human health hazards. The volatile fuel components can also migrate from soil and groundwater through the soil column, creating a vapor intrusion issue to surrounding buildings and affecting the occupants.

Fuel Oil Disposal

Home heating oil service may involve the disposal of fuel from the cleanup of a spill or removal from a tank. Fuel oil must be properly disposed of or recycled.

Residual Contaminant Liabilities

Discarded fuel oil and propane tanks may contain residual oil and gas, requiring proper removal and disposal. Old furnaces, water heaters, or expansion water tanks from a steam system might also have hidden asbestos, which at one time was widely used for insulation because it was so resistant to heat.

Contractors Pollution Liability Can Provide Coverage For

Contracting operations completed “by or on behalf of” the insured

Contracting operations performed at a jobsite

Third-party claims for bodily injury and property damage

Third-party claims for cleanup

First and third-party transportation pollution liability

Loading and unloading

Misdelivery of liquid products

Non-owned disposal sites

Mold, legionella, bacteria, and fungi

Lead and asbestos

Sudden and accidental coverage for owned/leased locations

First-party emergency response costs

Natural resource damage

Defense of third-party claims

Claims Scenarios & Examples

A fuel company accidentally transferred oil into an old tank instead of a new replacement one. Oil leaked out of the old tank, entered the ground, and permeated through the walls and floor of the residential property. The kerosene fumes caused the residents to suffer nausea, headaches, and sore throats.
A home heating company was delivering fuel to a residential townhome when the homeowner came out yelling that oil was being pumped into their finished basement. The delivery driver immediately realized he was delivering to the wrong address. The fuel migrated to two adjoining townhomes via sump pumps. All three homes were declared uninhabitable due to fumes and lower explosive limit. The claims totaled $2.6 million, which the auto and general liability insurers denied.
A school district brought suit against their heating oil service, which accidentally spilled oil on the school premises, resulting in the school shutting down. The suit claimed that the 6,500-gallon heating oil spill resulted in $1.3 million in damage.
Eight people were displaced after a home heating oil spill in the basement. An oil delivery truck filled a 275-gallon tank when it ruptured, spilling 170 gallons of oil. Seven adults and one child were displaced from the home while the city fire department hazmat tech supervised the operation to clean up.
A home heating contractor improperly replaced the o-ring on an oil filter casing, leading to a substantial amount of oil leaking onto the basement floor and under the house’s foundation. The homeowner’s policy paid for the cleanup and then subrogated against the contractor seeking $350,000 in damages.
Fuel oil from a bulk storage tank was found to have leaked from underground sewer hubs that were connected to aboveground storage tank drains. By the time the leak was discovered, contamination was detected in three groundwater plumes, and on-site groundwater was also contaminated. The refinery paid nearly $5 million in cleanup costs and attorney fees.

Final Consideration

As a contractor you can be faced with the cost to defend yourself against allegations or legal action from pollution related events, regardless if you are at fault or not. Having the proper insurance coverage in place will help fund the expenses incurred to investigate or defend against a claim or suit and provide you with environmental claims handling expertise.

This environmental risk overview offers a general understanding of potential risks and may not reflect all risks associated with your business. Environmental Risk Professionals has compiled this overview for informational purposes only. This overview does not constitute legal opinion or advice, nor does it establish a consultant-client relationship. This overview is not intended to guide project parties in interpreting specific contracts or resolving disputes; such decisions may require consultation with counsel and depend on various factors. © 2025 Environmental Risk Professionals, LLC

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