Control Of Well Insurance Policy Information
Control Of Well Insurance. It's imperative that wells are kept fully functioning in the oil and gas industry. Wells are, after all, one of the most vital components of your business. Given the fact that oil and gas are highly combustible, there is always a risk of an explosion or a fire.
Should that happen, not only would you be looking at serious damages that would need to be repaired, but it's likely that your business would also have to be shut down during the restoration process.
What would you do if a blowout did happen? What would you do if your wells needed to be restored or re-drilled? Would you be able to cover the costs of any of these situations on your own? More than likely, the answer is a resounding 'no'. That's why it's so important to carry a control of well insurance policy.
Control of well insurance helps restore the operations of your oil and gas wells after a well blowout occurs - including coverage for bringing well back under control, legal liability, cleaning up pollution, redrilling and more. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked control of well insurance questions:
- What Is Control Of Well Insurance?
- How Much Does Control Of Well Insurance Cost?
- What Is Control Of Well Insurance?
- What Does Control Of Well Insurance Cover?
- What Does Control Of Well Insurance Cover & Pay For?
What Is Control Of Well Insurance?
Control of well insurance, also known as well control insurance, is a type of insurance coverage that provides financial protection to oil and gas companies in the event of an uncontrolled release of oil, gas, or other hazardous substances from a well.
This type of insurance covers the costs associated with the clean-up, containment, and repair of a well following an incident. The coverage typically includes expenses related to the mobilization of equipment and personnel, as well as any legal fees and compensation claims.
Control of well insurance is designed to protect the oil and gas industry against the significant financial losses that can result from a well blowout or other catastrophic event.
How Much Does Control Of Well Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small control of wells ranges from $97 to $159 per month based on location, number of wells and more.
The cost of this type of insurance coverage varies from insurance company to insurance company; it is also based on the specific details of your business. For example, you might need to carry more coverage if your wells are located off-shore, as there is more of a risk for pollution after an explosion; plus, it usually costs more to re-drill a well that has been damaged.
What Is Control Of Well Insurance?
Control of well insurance (also known as well control insurance), is a specialized insurance policy that is designed to cover all or some of the costs that are linked to regaining the control of an oil or gas well.
This type of insurance also provides coverage for cleaning up any pollution that might occur should a blow out, re-drilling, or restoration project were to happen.
In simple terms, control of well insurance is designed to companies in the oil and gas industry, with the coverage they need for any of the risks that are associated with drilling and maintaining a well. The process of extracting gas and oil is a very complex process.
There is always a risk that something could go wrong and a well could sustain damage or become ineffective as the result of an explosion or some other catastrophic event.
Due to the process of extracting oil and gas, containing and stopping the flow of these substances can be very difficult. Trying to regain control of a damaged well can be extremely costly; not to mention the environmental damage that could occur should a well explode or otherwise become damage.
With control of well insurance, any necessary repairs that would need to be made should a well become damaged would be covered. This type of coverage also helps to pay for the efforts that are needed to stop any leaking oil or gas, as well as the cleanup and restoration process. It can also cover the re-drilling of a well after it has become damaged.
What Does Control Of Well Insurance Cover?
Following are four important control of well insurance coverages for oil and gas well operators to consider:
- Cost of Well Control - Covers the costs to bring the well under control after a blowout, and to cap or plug the oil well.
- Redrilling & Restoration Expense - Covers the costs of restoring the oil or gas well or replacing the lost well by redrilling a new one.
- Pollution Cleanup - Covers costs for pollution liability and cleanup and prevention costs to contain or remove toxic substances coming from the well above ground.
- Care, Custody, & Control - Covers third party property damage including: contractors' equipment, supplies, and rental tools, piping, and other equipment on site - which are usually damaged to some degree during a blowout.
Investing In Control Of Well Insurance
There are a number of highly reputable insurance companies that provide control of well insurance coverage. The policies they offer are designed to provide coverage for onshore and offshore wells. What a policy will cover varies from insurance provider to insurance provider; however, generally, these policies offer coverage for the following:
- The efforts that are necessary to regain control of a well after an explosion or other damage occurs.
- The expense of re-drilling the damaged well.
- The cleanup efforts and the costs that are associated with them after an explosion or other damage occurs.
The amount of control of well insurance coverage you would need depends on the exact specifications of your business, such as where in you are drilling (on-shore or off-shore) and the size of your wells, for example>
However, it is well understood that the limits for control of well insurance are rather high; they can cost into the 7-figure range, if not more.
Together with a reputable insurance broker, you can determine exactly how much control of well insurance you need to carry and how much your coverage will cost you.
What Does Control Of Well Insurance Cover & Pay For?
Control of Well (CoW) insurance, also known as Operators Extra Expense (OEE) insurance, is a specialized insurance policy designed to cover the financial risks associated with the drilling, completion, and operation of oil and gas wells. Some examples of Control of Well claims include:
Blowout: A blowout occurs when uncontrolled release of oil, gas, or other fluids happens during the drilling process. CoW insurance can help pay for the costs associated with regaining control of the well, clean-up, and remediation efforts. Additionally, it may cover legal fees and settlements related to any third-party lawsuits due to environmental damage or personal injuries caused by the blowout.
Cratering: Cratering is the sudden collapse of the ground around a well, potentially damaging the wellhead, drilling rig, or other equipment. Control of Well insurance can help cover the costs of repairing or replacing damaged equipment, restoring the well site, and any legal fees and settlements arising from third-party claims related to the incident.
Pollution: Accidental release of hazardous substances during drilling or production operations can result in pollution, causing harm to the environment and nearby communities. CoW insurance can help pay for the clean-up and remediation costs, as well as cover legal fees and settlements from third-party lawsuits arising due to the pollution incident.
Seepage and contamination: Uncontrolled seepage of oil or gas into underground formations or water sources can lead to contamination and potential environmental damage. Control of Well insurance can help cover the expenses associated with regaining control of the well, mitigating the contamination, and addressing any third-party claims resulting from the seepage.
Re-drill expenses: In some cases, a well may need to be re-drilled due to damage or loss during drilling operations. CoW insurance can help cover the costs of re-drilling the well, including labor, materials, and equipment expenses, as well as any legal fees or settlements arising from third-party claims related to the incident.
In each of these examples, Control of Well insurance helps protect the well operator from the financial risks associated with these incidents, ensuring that they have the resources necessary to address the situation and fulfill their obligations to any affected third parties.
Commercial Insurance And Business Industry Classification
- SIC CODE: 1381 Drilling Oil and Gas Wells
- NAICS CODE: 213111 Drilling Oil and Gas Wells
- Suggested Workers Compensation Code(s): 6235 Drilling or Redrilling of Oil or Gas Wells & Installation of Casing, Drivers
Description for 1381: Drilling Oil and Gas Wellsd
Division B: Mining | Major Group 13: Oil And Gas Extraction | Industry Group 138: Oil And Gas Field Services
1381 Drilling Oil and Gas Wells: Establishments primarily engaged in drilling wells for oil or gas field operations for others on a contract or fee basis. This industry includes contractors that specialize in spudding in, drilling in, redrilling, and directional drilling.
- Directional drilling of oil and gas wells on a contract basis
- Redrilling oil and gas wells on a contract basis
- Reworking oil and gas wells on a contract basis
- Spudding in oil and gas wells on a contract basis
- Well drilling gas, oil, and water intake: on a contract basis
Control Of Well Insurance - The Bottom Line
Gas and oil well drilling can be quite lucrative; but, the risks can also be great. By carrying the right type of control of well insurance, you can ensure that your business, your employees, and anyone who lives near the oil well will be well-protected.
Additional Resources For Miscellaneous Insurance
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Businesses need insurance for several reasons. Firstly, insurance protects businesses from potential financial losses that may result from unexpected events, such as accidents, natural disasters, or lawsuits. This financial protection can help businesses recover from unexpected events and continue to operate.
Secondly, business insurance can provide businesses with liability protection. This means that if a business is sued for damages or injuries that occurred on their property or as a result of their products or services, the insurance company will cover the legal costs and damages. Without insurance, businesses may have to pay these costs out of pocket, which can be financially devastating.
Thirdly, commercial insurance can also provide businesses with peace of mind. When businesses have insurance, they can focus on running and growing their business without constantly worrying about potential financial losses or legal issues.
Finally, business insurance can also be a requirement for certain businesses. For example, many businesses that work with the government or large corporations may be required to have certain types of insurance in order to do business with them.
In conclusion, businesses need insurance for financial protection, liability protection, peace of mind, and to meet certain requirements. It is an important aspect of running a successful business and can help ensure the long-term stability and growth of the company.