A 10-year regulation in Florida, requiring businesses with underground tanks storing hazardous materials to replace them by the end of this year, is the driver behind a new storage tank system and an innovative new insurance policy for those tanks.

Because of Florida's proximity to the ocean and high groundwater levels, the issue has important environmental connotations.

“When you've got fuel in underground storage tank situations, the prominent risk is the release of product into the environment that causes a pollution event,” said Ronald Bachmeier, chief operating officer of ZCL Composites in Edmonton, Canada.

Potentially thousands of Florida service station and convenience store owners who have not yet upgraded their existing single-wall fuel storage tanks to secondary containment may be forced to cease operations.

In addition, those who have not completed this required upgrade by the end of the year are experiencing cancellation or nonrenewals of their liability insurance policies. For many station owners, these liability insurance policies are required for them to meet federal and state Financial Responsibility requirements, and therefore to remain in business.

But a joint initiative of ZCL Composites Inc., the largest underground fiberglass tank manufacturer in North America, and Freberg Environmental Insurance, a Denver, Colo.-based program manager, could remedy those problems. Together they developed Prezerver, a comprehensive, noncancellable, 10-year underground storage tank insurance policy for ZCL's U.S. customers.

For U.S. customers, the one-time premium feature of the Preserver insurance policy eliminates annual renewals, thereby avoiding the likelihood of premium rate increases as tanks age. The policy also is transferable to a new site owner, and lenders can be added as additional insureds.

Prezerver is underwritten in the United States by Endurance American Specialty Insurance Co., rated “A” by rating agency A.M. Best Co. The coverage was arranged by Willis HRH through Freberg Environmental Insurance.

Freberg Environmental Insurance, an insurance program manager that specializes in developing, marketing and underwriting environmental insurance programs, is part of the Willis Programs unit of Willis HRH, the North American retail business of Willis Group Holdings.

The U.S. coverage offered under Prezerver provides many advantages over alternative financial assurance mechanisms. Unlike most state funds, Prezerver also provides coverage for equipment repair and replacement costs. Further, the policy pays on the owner's behalf as cleanup expenses are incurred, while state funds typically reimburse only after remediation and repair costs have been paid by the site owner.

In addition to the Prezerver insurance policy, ZCL and Xerxes, ZCL's U.S. subsidiary, provide a manufacturer's warranty of up to 30 years against corrosion on its underground fiberglass tanks, provided the products are installed and used solely for storage of listed liquids.

The Prezerver policy is available to owners of ZCL underground storage tanks anywhere in the United States, but the policy particularly helps those gas station owners dealing with the potential insurance crisis in Florida.

Mr. Bachmeier said that coverage for underground tanks has evolved over the last 20-30 years in response to the needs of “both us as a manufacturer and to our customer's needs for pollution and liability insurance.” He said that 30 years ago there were limited products available for pollution liability.

“What we've been able to do is find and form relationships with people who are interested, not only in meeting our needs as a manufacturer but also in meeting the needs of our customers,” he said.

The new product, he said, is a package of pollution liability insurance being sold with the equipment package to customers. He noted that the company, which is not in the business of selling insurance, has partnered with Willis HRH, which located the insurance product.

The Prezerver insurance solution follows ZCL's introduction into the U.S. market last year of its Prezerver double-wall storage tanks. The tanks are manufactured with Parabeam, ZCL's patented, three-dimensional glass fiber material. The unique design of the double-wall storage tanks allows the tanks to be continuously monitored, using a brine-filled interstice.

ZCL introduced the double-wall fiberglass tanks in Canada in 1989 and created the Prezerver insurance policy in Canada in 1996. So far, there has never been a substantiated claim against the Prezerver policy in Canada, the company said.

Special Reports /

Florida Regulation Presses Underground Storage Tank Issue; Insurance In Jeopardy

Related Stories

Recommended For You