An oil and gas contractor must have the appropriate insurance coverage. Because of the potential liabilities associated with accidents within the oil and gas sector, contractors in the field often purchase specialized general liability policies.
Types of General Oil and Gas Policies
There are two main types of general liability insurance for oil and gas contractors: on-shore and off-shore. Although the two overlap in many areas, on-shore policies provide coverage for drilling, maintaining, and surveying oil wells and rigs on dry land while off-shore policies provide coverage for water-based oil endeavors. The type of policy that is needed depends on the location in which the contractor works.
Although not identified under the term "general," oil and gas contractors can also purchase environmental coverage. This type of policy provides protection against environmental damage caused by accidents from the oil and gas endeavors.
Most general and environmental policies designed for the sector specify the type of contractor they cover. Contractors in positions not covered by the policy are ineligible for the policy type. Examples of contractor types include tool operators, survey workers, pipeline transporters, wire line layers, and cover drillers.
Contractor Coverage and Policy Operation
General liability coverage protects the contractor against any damage to person or property caused by their work. Usually, they include workers compensation for the contractor; personal injury for another contractor, sub-contractor, or third party; damage to the property or nearby properties, and automobile and transportation accidents.
Except for being geared towards the industry and having higher than normal minimums because of the seriousness of any injuries or accidents that occur within the sector, these policies operate similar to other types of insurance policies. The policy holder pays a premium, either yearly or monthly, for coverage. If an accident occurs, they must then meet a deductible before coverage is available.
One significant difference between these policies and traditional ones is that they are not available in all states. Most companies limit their availability to states with oil and gas industries, such as Texas, Louisiana, Alaska and Mississippi. Therefore, not all policies may be available to all contractors. More importantly, coverage may not extend to accidents occurring outside of the covered areas.
Basic Policy Amounts
Coverage amounts vary depending on the policy holder's needs and situation, but most policies carry minimum liability amounts ranging from $15,000 to $50,000. These minimums usually provide as much as $20 million in coverage.
Companies Providing Coverage
Sloan Mason Insurance Services
Sloan Mason Insurance Services provides coverage for contractors in Alaska, Texas, Louisiana, Alabama, Mississippi, and California. It provides three different policy types: Marine General Liability, for off-shore drilling; Off-Shore General Contractor, for marine oil and gas contract workers; and Oil and Gas Insurance, which is available to on-shore contract workers.
Coverage amounts vary depending on the policy holder's needs and the company's risk assessment. Most of its policies have a $25,000 minimum limit and a deductible ranging from $10,000 to $50,000. It provides a minimum of $1 million per incident and a maximum coverage total of $20 million.
Colorado-based Adco General provides contractor general liability insurance. This insurance is available to contractors in any sector, including oil and gas. However, it also provides environmental policies. The company does not provide its rates or minimum and maximum coverage amounts online, but will provide this information when contacted or upon request.
Berkley Oil and Gas Specialty Services, LLC
Berkley Oil and Gas Specialty Services, LLC focuses on insurance policies for the oil and gas sector. It covers contracting operators, logging, pipeline layers, well-servicers, and other types of contractors. Policy limits and other information are available upon request.
Choosing Your Insurance Policy
If you are a contractor in the oil and gas industry, general liability insurance can protect you against needing to pay expenses for damages resulting from accidents. Prior to purchasing a policy, however, ensure that its coverage extends to the state you work in and to your particular position. Seek advice from a broker or agent if you are unsure about your insurance needs.