Oil Tanks and Old Wiring: What Insurers Ask For

Why these two items worry insurers

A leaking oil tank can contaminate the soil, the basement and sometimes neighbouring properties. Decontamination costs can be very high, which explains insurers' caution. Old or poorly modified wiring, for its part, increases the risk of fire, the most serious type of loss for a house.

In both cases, the insurer wants to know whether the risk is under control: age, condition, compliance, maintenance. This context is presented in when insurability blocks the loan.

The oil tank: what gets checked

Questions usually concern the tank's age, its location, indoors or outdoors, and its condition: rust, seepage, supports, impact protection, lines. An indoor tank installed near a floor drain, or a poorly protected outdoor tank, draws particular attention.

The inspector notes the tank's presence, location and visible condition, without being able to comment on the inside of its wall. When the tank is old, several insurers may require its replacement or, if oil heating is no longer used, its removal by a specialized company.

Traces of a former tank

A house may no longer heat with oil yet still show traces of a former tank: lines coming out of a wall, an outdoor fill pipe, an old location in the basement. The inspector reports these clues, because an abandoned tank, especially a buried one, can pose an environmental risk.

If these clues appear, ask the seller what happened to the tank and whether there's proof of its removal. This information interests the insurer, but also the buyer, who wouldn't want to inherit contamination.

Where a removal is documented, keep the paperwork with the property records. A future buyer's insurer may ask the same question, and a certificate from the company that removed the tank answers it in seconds.

Old wiring: what gets checked

For wiring, questions concern the panel type, fuses or breakers, the electrical service's capacity, old wiring still in service and visible unpermitted modifications. Signs of overheating, such as heat marks on a breaker, are also taken seriously.

The inspector notes these items as far as they're visible; they don't take walls apart to trace every circuit. When in doubt, they recommend a check by a master electrician, whose report or certificate often directly answers the insurer's requirements.

Settling the question before signing

The most effective approach is to send these findings to the insurer as soon as the inspection report arrives. Depending on its answer, the borrower can obtain a quote to replace the tank or upgrade the wiring, and negotiate with the seller if needed.

This work can also lead to a price adjustment or be included in the financing, as we explain in renegotiation after the inspection. What matters is that the question is settled before the notary appointment.

Oil and wiring: questions for the seller

A few simple questions to the seller guide the process. How old is the tank, and is there an installation invoice? Has it ever been inspected or replaced? Has the electrical panel been changed, by whom and with what permit? Has the seller's current insurer ever set requirements about the tank or the wiring?

That last question is often the most revealing. If the seller's insurer required corrections that were never made, the buyer's insurer is very likely to impose the same requirement. It's better to know before waiving conditions.

Ask for the answers in writing through the brokers. A written reply from the seller becomes part of the file, and it gives the buyer's insurer something concrete to work with instead of a second-hand summary of a phone conversation.

An inspection that describes these items clearly

A report that specifies the panel type, visible old wiring, and the oil tank's apparent age and location gives the insurer most of what it will ask for. It avoids last-minute back-and-forth.

To arrange an inspection on a client's behalf, see our page for partner brokers, and the complete guide for mortgage brokers.