A high liquid alarm system for use in detecting the presence of water and oil in water present in a confined space is disclosed. In one implementation, the system includes an optical sensor capable of detecting water at a certain level, a sensing device capable of differentiating oil and water, and an alarm indicator. The sensors are in communication with an indicator which is capable of providing alert signals. The optical sensor is configured to activate a second alarm in the indicator when water is detected at about a predetermined level and the sensing device is configured to trigger a first alarm when oil in water is detected at about the predetermined level. The sensors can also be interconnected such that the sensing device is activated upon detection of water by the optical sensor, reducing the power consumption of the system.