Operating an oil rig is a risky venture. From minor worker injuries to billion-dollar well blowouts, anything can happen. Luckily, your business can survive even the most major accidents with the right insurance.
Are you unsure if all your risks are covered on the rig? Keep reading to learn about the different oil rig insurance coverages that protect your property, employees, and liability.
What Types of Drilling Insurance Do You Need?
To protect your oil and gas company from financial damage, you need a range of oil rig insurance coverages, both specialized and standard:
Control of Well Insurance
No matter how careful your water well drilling contractors are, uncontrollable well blowouts can happen at any time. And while a small spill may not seem like a huge deal, the cleanup costs can cost tens of thousands of dollars. If your offshore rig loses a significant amount of oil, those costs can skyrocket.
With control of well insurance, you don’t have to pay for everything out of pocket. Your insurance company covers costs related to regaining well control, cleaning up spills, and restoring the well.
Riggers General Liability Insurance
General liability coverage is essential for nearly every company, including those in the oil and gas industry. This coverage pays for lawsuit costs if a third party sues your company for property damage or bodily injury. However, standard general liability policies typically don’t cover damage to property belonging to someone else.
If you move expensive equipment that belongs to another company, you also need riggers liability insurance, which adds oil rig insurance coverage for third-party property.
Hull and Rig Insurance
Whether it’s a wreck or a natural disaster, one accident could inflict millions of dollars in damage to your oil rig. A hull and rig insurance policy helps you pay for repairs or replacements, so your company’s bank account doesn’t take a devastating hit.
It’s important to keep in mind that most property policies don’t cover structures during the construction process. If you’re about to break ground on a new rig or upgrade your current one, you need builder’s risk insurance.
Oil and Gas Lease Property Insurance
If you house expensive equipment on your oil lease property (OLP), specialized oil rig insurance coverage can help you replace or restore it after a loss event. Depending on the OLP policy you choose, you may have to list each item, where it’s located, and how much it’s worth, but some policies also provide coverage for unscheduled equipment. If you store a significant amount of oil on your site, look for an OLP policy that covers crude petroleum.
Business Interruption Insurance
When you experience a well blowout, natural disaster, or equipment breakdown, property damage isn’t the only thing you’ll pay for. While you wait to restore or repair your equipment, you might have to cease oil and gas operations for days. Even a temporary shutdown can cost you substantially in lost profits.
Business interruption insurance pays for lost income and standard operating costs while you recover from a property loss event. Depending on the severity of your loss, this financial safety net can save you from shutting down permanently.
If an oil spill contaminates someone else’s land or damages their property, you could be liable for damages. However, most general liability policies don’t cover lawsuits related to pollution. You need a pollution liability policy to address this oil rig insurance coverage gap.
In addition to lawsuit costs, many pollution insurance policies also help pay for crisis management and cleanup costs. Depending on the policy you choose, you may be able to receive financial assistance if a third party sues you for a pollution event that occurred years in the past.
Workers’ Compensation Insurance
Employees in the oil and gas industry face various safety hazards each day, from explosions to falls. If one gets injured on the jobsite, your company could be held responsible for medical bills, lost wages, and rehabilitation costs. By purchasing a workers’ compensation policy, you can help your employee remain financially stable during recovery and protect your company.
Commercial Auto Insurance
While your employees may not face auto-related risks on the oil rig, they have to drive to get to the jobsite. That drive can actually be the most dangerous part of your workers’ days—highway car crashes cause 40% of all oil and gas fatalities. While there’s nothing you can do to prevent crashes altogether, you can avoid financial loss with a commercial auto policy.
Your commercial auto insurance policy helps pay for damage to your vehicles and lawsuit costs from third parties involved in an accident with your employee.
Your oil rig isn’t the only place your company will face risks. Oil and gas companies are prime targets for cybercriminals. Learn why cyber insurance is a crucial component of your oil rig insurance coverage
Turn to the Experts for Rig Insurance Services
Finding insurance for your oil and gas business is no easy task, but it’s crucial in protecting your financial future. Without the right coverage, you could end up with a seven-figure problem and no assistance. Don’t wait until it’s too late to make sure you have all the oil rig insurance coverages you need—turn to InSource.
We specialize in building custom insurance programs for oil and gas companies across Texas and the United States. As a risk management agency, we go the extra mile to ensure no risk is left uncovered, which means you never have to worry about an uncovered claim. We’re here to help during every step of the oil rig insurance coverage process, from preparing applications to filing a claim.
Whether you need a suite of new oil rig insurance coverages or a few additional policies for peace of mind, the experts at InSource can help you find the most affordable, comprehensive coverage. Contact us today to learn more about our oil rig insurance coverage.