Your Own Personal Oil Spill

By Joe Taylor on June 29th, 2010

Home insurance companies have scrambled to alert homeowners in the Southeastern United States that National Flood Insurance Program policies already cover damage to homes from the BP oil spill in the Gulf of Mexico. Homeowners in the Northeast face a different kind of danger from oil leaks, and they may not have the same kind of protection.

Oil furnaces remain common in cold weather states like Massachusetts and New York. In Massachusetts, state law sets strict guidelines for furnace maintenance, such as replacing tanks every twenty years or installing mandated safety valves that prevent oil spills.

Only HO-3 Policies Cover Oil Furnace Leak Damage

An HO-3 policy extends your homeowners insurance by covering any kind of damage to your property except those specifically excluded in your policy. Those exclusions include flood and earthquake damage, which you can often insure by participating in government programs. Unless specifically excluded by your carrier, an HO-3 home insurance policy covers household and environmental damage caused when oil leaks or spills from your home furnace. Under an HO-3 policy, most companies will also cover damage from smoke or fire if your oil leak ignites.

Cleaning Up a Home Furnace Oil Spill

Depending on your home insurance company's procedures, you may also qualify for assistance in cleaning up the oil from your leaky furnace. Without a thorough cleanup effort, home heating oil can pose threats for fire or carbon monoxide poisoning. Sawdust and rags used to soak up oily patches in your basement must be disposed using methods approved by your state's department of environmental protection. Failing to clean up correctly could void your homeowners insurance over time.

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