Storage Tanks Insurance & Risk Assessment

A devastating tank rupture accident occurred in 2018 at one of the storage tanks terminals situated at Karachi port. Few precious lives were lost and dozens of workers received fatal and non-fatal injuries due to explosion & spillage of tons of molasses. Huge quantity of molasses spread over a large area in the vicinity causing damage to piping’s, pumps and other property damages.

Various insurance covers are available in the market for sudden and unforeseen physical losses or damages to storage tanks, primarily bulk storage tanks such as palm oil tanks or fuel oil tanks. Usually these tanks are vulnerable to numerous forms of accidental damage which may include impact damage, bursting, splitting, rupture and collapse. The loss of content is also included as extension in the policy.

For tanks insurance, at first, general information is required by the underwriter at proposal stage and later a risk assessment exercise is carried out to ascertain associated risks. Before carrying risk assessment, a surveyor or an underwriter should be aware of various loss scenarios associated with storage tanks. Major causes are as under;

·????Lightning (Poor grounding, Rim Seal Leaks)

·????Maintenance Error (Welding, Non-explosion Proof Motor and Tools used, Poor Grounding of Soldering Equipment)

·????Operational Error (Overfilling is the most frequent cause, Drain Wall Left Open Accidently, Accidental Movement of Tanker during Filling, Oil Leaks due to Operator Error)

·????Equipment/Instrument Failure (Relief Valve , Level Indicator, Discharge Valve, Thermostat Failure, O2 Analyzer Failure, Floating Roof Sunk)

·????Crack and Rupture (Poor Fabrication, Corrosion, Poor Soldering, Shell Distortion, Subsidence)

·????Static Electricity (Liquid Transfer, Poor Grounding, Rubber Seal Cutting, Improper Sampling Procedures)

·????Leak & Line Rupture (Cut accidently by Contractor, Pump Leak, Low Temperature, Flammable Liquid Leak from a Gasket)

·????Misc. (Arson, Earthquake, Hurricane, Terrorist Attack, Ground Fire, Smoking, Auto-ignition)

Specific information is then asked from the insured for better risk understanding and effective underwriting. Few sample questions includes;

·????Total number of Storage tanks

·????Years of manufacturing of tanks

·????Combined storage capacity of tanks product wise

·????Size (dia, height of tank)

·????Fixed or floating roof

·????What design code is followed for erection of tanks?

·????Hydro testing at what pressure: (Test report)

·????Tank foundation settlement Report

·????UT test carried out in which year? (Ask for reports)

·????Useful remaining life of tank – any risk based inspection?

·????Last paint activity carried out in which year:

·????Any apparent sign of paint failure

·????Any sign or evidence of tank settlement or foundation washout

·????Water drainage from top of the tank:

·????Any noticeable distortions in tank shell, head, buckling or bulging?

·????Any holes on the roof tank

·????Vents free of obstruction (to avoid vacuum induced buckling)

·????Screen on vents

·????If tanks are insulated- Any signs of damage to insulation

·????Overfill Protections

·????Any automated overfill protection system

·???????Does HHL (high high level) alarm sounds in case of any dangerous overfill

·???????Liquid Level Sensing Device

·???????What are the product cutout procedures to prohibit overfill

·???????Are overfill protections in proper working condition

·???????Emergency shutdown valve checking and inspection

·???????When was last time inspection, testing and maintenance carried out for overfill protections

·???????Tanks are grounded sufficiently

·???????Earthing pits inside site

·???????Earthing pits inspection schedule

·???????Earthing system for product filling and unloading, what type of earthing protection at gantry

·???????What are dia of piping systems

·???????Design pressure of piping

·???????Any visible corrosion of welded seams

·???????Any damp areas outside of tank indicating any pinhole leaks

·???????Are tanks adequately labeled

·???????Secondary containments (brick masonry/metal)

·???????Containment sufficient to hold 110% of the tank capacity

·???????Housekeeping inside secondary containment