Making bio diesel? - Check your home insurance cover first

With the credit crunch hitting everyone's pockets and the cost of diesel being very high, more and more people are considering making bio diesel from cooking oil.

Making your own fuel is legal; the government allows you to produce 2,500 litres of bio fuel a year tax free, so there is a genuine cost saving to be made from producing your own fuel.

A recent news story noted that a man in Northamptonshire was injured when making bio diesel from cooking oil. He was using an electric drill to mix the oil with ethanol and caustic soda when a spark ignited the flames, causing the explosion. He suffered 20% burns and blew up his garage which he was using as a makeshift factory.

It is apparent then, that if you are intending to make your own bio diesel you should be aware of the dangers involved and the safety implications needed. More importantly though, consideration should be given to whether your home insurance policy will cover any damage caused if an explosion should occur.

Most insurers' policy wordings state that policyholders are required to ensure that "reasonable precautions" are adhered to. This means that the policyholder is required to "keep any property insured in a good state of repair and take all reasonable steps to prevent accidents, injury, loss and damage". This clause could be applied by some insurers where there was evidence that the policyholder did not take "reasonable steps" when manufacturing bio diesel, which could mean a claim for damage caused is refused.

Mike Powell, Consultant for General Insurance at Defaqto, says: "The dangers of producing your own bio diesel are very real; however, for some people the savings to be made are very enticing. If you are intending to manufacture your own bio diesel, you should first check with your home insurer to confirm that cover will be provided against any damage caused to your home.

"Finding out after an explosion that cover is not provided could leave you in a disastrous financial position, as the costs of repair would be beyond most people's reach. If the worst was to happen and your home was completely destroyed, then being homeless is a far more worrying position to be in than saving a few pounds by producing your own diesel."

Powell adds: "If you are intending to make your own bio diesel then it is advisable that the manufacturing process is completed as far away from your home as possible and in an area, that if the worst should happen, then the impact of any damage would hopefully be reduced."