Nicholas Brisson, B.B.A., CIP, CRM

Oil Heating, to Keep or Not to Keep?

Many households are still heated by oil. Some of you may be thinking of switching to another source of heating to either save money in the long run or simply because your current heating system is obsolete.

However, oil heating offers advantages that other heating options don’t. For example, if you are thinking of upgrading to an electric system, bear in mind that in case of power failure, you may be deprived of heat for hours. It may also be possible that your electrical panel is not strong enough to power your new heating system, which would translate into additional costs.

Oil heating requires regular maintenance. An inspection of the heater and the tank should be performed on a yearly basis, the carbon monoxide detector should be in working order and be checked regularly, and the chimney must be cleaned.

The advantages of oil heating

Oil heating boasts a few advantages:

  • It heats your home quickly and evenly
  • The system distributes forced warm air, which generates good air quality because it is filtered
  • Supply in fuel oil is relatively easy with many suppliers to choose from

You can also save without necessarily replacing your whole system:

  • Change the burner for a newer one for increased efficiency
  • Seal your home from drafts to prevent heat loss

What matters most is to evaluate your heating needs and to think about the available options in your area. By weighing the pros and cons of each, you will surely find the solution best suited for your situation.

Insurance matters

If you decide to keep your oil furnace (or if you have one whether you like it or not), you must have it covered on your insurance contract. This will protect you in case of a spill. Damage caused in the event of oil leakage or overflow and on-site decontamination of the premises are not covered by your basic homeowners insurance. Decontamination costs can easily reach $100,000. You must therefore purchase a separate coverage through an endorsement. The cost of this added protection is minimal compared to the extent of the potential damage. Generally, you can purchase this coverage if your indoor tank is under 20 years old and under 10 years old for an outdoor one.

The risks

Several risks are associated with older oil tanks. The chances of a tank breaking or rupturing is higher with time and this will likely happen well before any deterioration of the outer tank is visible.

There are two types of damage:

  1. Direct damage, such as destruction of your personal property, pollution of your soil or subsoil or damage of your concrete fill.
  2. Third-party damage, for example, through groundwater or to neighbouring property. You will financially be held responsible for any oil spill or overflow. This could be a heavy load to bear if you are not adequately protected by your insurance contract or you have not performed the required maintenance to your heating system to be eligible for this coverage.

To make sure you are properly covered by your home insurance, refer to Declarations section of your contract where you will find the “Escape of Fuel Oil” endorsement with a reference to third-party liability and decontamination of the premises. There are two sections to this endorsement:

  • Decontamination of the premises aims to protect you against direct or indirect damage to your personal property
  • Third-party liability aims to protect you against a civil law suit in the event of oil leakage

If your oil tank is underground, this coverage is not offered. If this situation applies to you or if you think you are missing this coverage, contact your Lareau broker who will be more than happy to answer your questions and examine your needs.

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Nicholas Brisson, B.B.A., CIP, CRM Damage Insurance Broker See the profile

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