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A guide to insuring and protecting onsite fuel storage

Bulk buying and storing fuel onsite might save your business money, but it also introduces risks that may not be covered by standard commercial insurance policies. This article considers these risks, how to protect fuel stock, and what you can do to minimise financial losses.

Updated: 27.08.26

By Sam Brown

Fuel stocks

What are the risks of storing fuel on your business premises?

Fuel prices can fluctuate based on market forces. This, coupled with the 2022 restrictions on red diesel, means many businesses now hold greater fuel reserves than before. But the (often increasing) cost of diesel also means that onsite fuel stocks are at greater risk of theft. Not only that, unless your business insurance policy is being regularly reviewed, your sum insured might not be sufficient to cover losses.

It’s also important to consider the risk of environmental damage from leaks or accidental fuel spills, which can lead to costly cleanup and fines.

Underinsurance and checking your sum insured

Even if your commercial business insurance covers diesel and petrol stored onsite, it’s important to check that the sum insured accurately reflects the current market price. As fuel costs can fluctuate, any sum set at the start of the policy term could soon be out of date, leaving you underinsured.

If your policy applies the ‘average clause’, then being underinsured can lead to even greater financial losses. This is because your insurer can reduce any payment by the percentage you’re underinsured by (even if your claim is for less than the total sum insured). For example:

If you have £10,000 of fuel but only insure it for £7,000, you are underinsured by 30%. Under the average clause, your insurer may reduce any claim payment by the same proportion. For example, if you suffered a £7,000 loss, your insurer would only pay £4,900 (70% of the loss), leaving you to fund the remaining £2,100 yourself. If you suffered a total loss of £10,000, the maximum payment would be £7,000.

With this in mind, it’s worth reviewing your policy’s sum insured regularly to ensure it covers the cost of fuel, minimising the risk of underinsurance, and preventing financial losses.

How to protect fuel from theft

Fuel is high-value and a common target for thieves. Rural areas in particular are at greater risk, and many agricultural businesses report that criminals are becoming increasingly organised, scouting out sites before returning and carrying out the theft. In some counties, rural crime has tripled in recent years.

While it’s always difficult to prevent determined criminals, you can reduce the risk of theft by reviewing and updating your on-site security measures. Practical and actionable tips include:

  • Storing fuel away from roads and in areas where it is not visible or accessible.

  • Installing motion-activated lighting to deter opportunistic thieves.

  • Adding physical barriers to your premises, such as heavy-duty padlocks, cages and gates, or installing high fences.

  • Using CCTV to monitor your site and provide evidence of theft for the police and your insurer.

  • Fitting an alarm on fuel tanks which is triggered by a sudden drop in level.

  • Add an anti-siphoning device to your tank to stop fuel from being drawn out.

For more information and advice, visit Secured by Design, an initiative owned by the UK police service that helps people improve security.

Managing environmental risk and pollution

Organisations are typically expected to manage the cost of any pollution or environmental damage they cause. This is known as the ‘polluter pays’ principle.

Standard commercial business insurance won’t typically cover the cost of environmental damage. Even if your policy includes  public liability, this usually only covers ‘sudden and accidental’ pollution and legal and clean-up costs in relation to third-party sites. In most cases, standard policies exclude:

  • Gradual leaks (such as fuel leaking from a corroded pipe).

  • Clean-up costs for your own land.

To protect your business, consider adding environmental impairment liability (EIL) cover to your commercial business insurance policy. These policies meet clean-up costs for sudden and gradual pollution (first and third-party), pay for legal defence, and compensate third parties for damage to neighbouring land. Depending on the terms of your policy, it may also cover costs associated with lost business.

It’s worth noting that EIL policies generally won’t cover the cost of any fines or penalties you’ve been given because of pollution, such as by the Environment Agency.

You can find out more about reporting environmental issues here.

Protecting the environment and your business

Commercial business insurance is your organisation’s safety net, helping you cover potentially devastating financial losses. To ensure it’s suitable, you should:

  • Regularly check that the sum insured reflects current repair or replacement costs (whether that’s for fuel, property, or any other commodity whose prices fluctuate).

  • Take a precautionary approach and prioritise onsite security, particularly around fuel storage facilities or tanks.

  • Review risk assessments and ensure that you follow government rules for storing hazardous materials, including fuel and oil.

  • Check that your commercial business insurance and EIL policies reflect your business needs and provide suitable cover.

If you want to find out more about commercial business insurance, including insuring onsite fuel storage, you can speak to a member of our team. As independent brokers, our experts have worked with a variety of businesses. As well as tailoring policies to suit you, we can help you with risk management, identify any gaps in your existing cover, and investigate the options available to you. Speak to our team on 01603 218000.

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