Oil And Gas Lease Insurance Policy Information
Oil And Gas Lease Insurance. You've put a tremendous amount of time, money, and effort into ensuring the success of your oil and gas business. You go above and beyond to make sure that you are offering the highest quality products, the best possible services, and the most affordable prices.
All of the equipment and machinery that you is state-of-the-art and regularly passes rigorous inspections, and your employees receive extensive training.
Despite all of your best efforts to ensure that your oil and gas business is running smoothly and safely, sometimes, the unexpected can happen. When it does, you'll be thankful that you have the right type of oil and gas lease insurance insurance.
Oil and gas lease insurance protects your leased property from theft, damage and more with rates as low as $97/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked oil & gas lease insurance questions:
- What Is Oil And Gas Lease Insurance?
- How Much Does Oil And Gas Lease Insurance Cost?
- Why Do Oil And Gas Leases Need Insurance?
- What Type Of Insurance Do Oil And Gas Lessees Need?
- What Does Oil And Gas Lease Insurance Cover & Pay For?
What Is Oil And Gas Lease Insurance?
Oil and gas lease insurance is a type of insurance coverage specifically designed for companies that operate in the oil and gas industry. This type of insurance provides coverage for the various risks and liabilities associated with oil and gas leasing operations, including environmental damage, property damage, injury to workers and other parties, and other types of losses.
This coverage can help to protect oil and gas companies from financial losses due to unexpected events and can help to ensure that they are able to continue operating effectively and efficiently even in the face of unexpected risks and challenges.
How Much Does Oil And Gas Lease Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small oil and gas leases ranges from $97 to $159 per month based on location, size, payroll, sales and experience.
Why Do Oil And Gas Lessees Need Insurance?
In order to operate n oil and gas lease property, you are legally required to have insurance coverage; but even if you weren't, you would still want to make sure that you were covered. Why? - Because you have invested a great deal of money in all of the tools and equipment that are needed to run your business.
You also want to make sure that your employees, your clients - and you, yourself - are protected.
Being that oil and gas are highly combustible, in your line of work, there is always a risk of a fire or an explosion. Other issues can arise, such as spills, slips and falls, and property damage; just to name a few problems that you could encounter.
The costs of repairs, lost property, medical bills, and any legal issues that could arise if a disaster did occur could be financially devastating. If you didn't have insurance, you would have to pay these astronomical expenses out of your own pocket.
Would you have the money to pay for such exorbitant costs? More than likely, the answer is no.
Without oil and gas lease insurance insurance, if something goes awry, you could potentially go bankrupt. Insurance protects your business, your employees, your customers - and you and your family - from any travesties that could arise and the financial burdens that are associated with them.
What Type Of Insurance Do Oil And Gas Lessees Need?
There are a number of insurance policies oil and gas lesses should carry. Some examples of the types of coverage you should invest in include:
- Commercial Property Insurance - This type of insurance protects the physical structure of your commercial property, as well as the contents within it; your equipment, office supplies, etc. If a tree were to fall on your property and damage the building or if someone were to vandalize or rob your business, this type of coverage would pay for any damages or lost property.
- Commercial General Liability Insurance - This form of insurance provides protection against third party accidents, injuries, and legal claims. For example, if a customer were to slip and fall while visiting your commercial property and sustain an injury, this form of coverage would not only pay for any related medical expenses, but it would also help to cover the cost of any legal claims that the individual might make against you and your business.
- Workers Compensation Insurance - If an employee were to become injured on the job or develop a work-related illness, workers comp would cover any related medical expenses, wages that the employee would lose while he or she is unable to work; and, it could help to pay for any legal expenses, should the employee file a lawsuit against you.
- Inland Marine Insurance - Commercial property insurance doesn't cover equipment that isn't on the site of your commercial space. For instance, if a truck were out on a delivery and it were stolen, vandalized, or an explosion occurred, commercial property insurance wouldn't cover the damages. For that, you would need inland marine insurance. This type of insurance covers property as it is in-transit and off the premises of your commercial property.
These are just some of the types of oil and gas lease coverage that should be considered.
Oil & Gas Lessee's Risks & Exposures
Premises liability exposures at the job site, excavation and construction pose numerous hazards. The area of operation should be restricted by barriers and proper signage to protect against trips, slips and falls from debris, equipment, or uneven ground. Construction sites create an attractive nuisance hazard, especially if work is close to residential areas.
Digging can result in cutting utility cables, damaging property of the utility company and disrupting service to neighboring residences or businesses. Absence of detailed procedures to determine utility locations and to research prior uses of the land before digging may indicate a morale hazard.
Workers compensation exposures can be high. Back injuries, hernias, sprains and strains can occur from lifting, material handling and work with hand tools. Overturn of equipment can result in severe injury or death from crushing or suffocation. Cumulative exposure to the high-decibel operations may result in permanent hearing impairment.
Underground hazards may arise from striking objects or utilities, collapse of retaining or holding walls, mudslides, landslides, underground water, and sinkholes. Any contact with utilities, specifically electrical cables or gas lines, can cause injury from explosion, electrocution, or inhalation of caustic substances.
The absence of good maintenance, proper use of basic safety equipment, such as steel-toed shoes, hearing and eye protection, and strict enforcement of safety practices may indicate a morale hazard.
Property exposures are usually limited to:
- Crude Oil
- Pipelines & Gathering Systems
- Production Equipment
Welding equipment, if any, presents a heavy fire exposure and should be conducted away from flammables. Any flammable chemicals or oxygen tanks must be properly labeled, separated, and stored in approved containers, cabinets, and rooms.
Crime exposures are from employee dishonesty. Background checks, including criminal history, should be obtained on each employee prior to hiring.
Ground at the construction site may be uneven. Equipment may strike underground objects, strike utility cables, fall into holes or pits, slip or fall into mud, water, or sinkholes, be damaged in rock, land or mud slides, or burst into fire from overload. Equipment left at job sites may be targets for theft and vandalism.
Commercial auto exposures can be high due to the transport of materials, machinery, and equipment. All drivers must be well trained and have valid licenses for the type of vehicle being driven. MVRs must be run on a regular basis. Random drug and alcohol testing should be conducted.
Vehicles must be well maintained with records kept in a central location. Some of the driving may be done on temporary access roads, increasing the risk of collision and overturn.
What Does Oil And Gas Lease Insurance Cover & Pay For?
Oil and gas lease claims can arise from various disputes between the lessor (landowner) and the lessee (oil and gas company). Here are some examples of such claims and how oil and gas lease insurance can help pay for the lawsuit:
Surface Damage Claims: In this scenario, the landowner claims that the oil and gas operations have caused significant damage to the surface of the property, such as soil erosion, damage to water sources, or destruction of vegetation. Oil and gas lease insurance can provide coverage for the costs associated with restoring the surface, compensating the landowner for the damage, and paying for the legal fees to defend against the claim.
Royalty Payment Disputes: A landowner may claim that the oil and gas company has not accurately calculated or paid the royalties due under the lease agreement. Insurance for oil and gas lease operations can cover the costs of defending against the claim, any additional royalty payments found to be owed, and legal fees associated with resolving the dispute.
Environmental Contamination Claims: A claim may arise if the landowner alleges that the oil and gas operations have resulted in environmental contamination, such as groundwater pollution or air pollution. Oil and gas lease insurance can cover the costs of investigating the claim, remediating any environmental damage, compensating the landowner for any loss of property value, and paying for legal defense.
Lease Termination Disputes: In this case, a landowner might claim that the oil and gas company has breached the lease agreement, warranting its termination. The insurance can help cover the legal costs of defending against the claim and any damages awarded to the landowner, such as lost royalties or lease bonus payments.
Indemnification Claims: An indemnification claim can arise when a third party (such as a contractor or another landowner) alleges that they have suffered damages as a result of the oil and gas operations on the insured's leased property. Oil and gas lease insurance can cover the costs of defending against such claims, as well as any damages awarded to the third party.
Title Disputes: A title dispute may occur when there is a disagreement over the ownership of the mineral rights or the validity of the lease. Oil and gas lease insurance can help cover the costs of investigating the title, defending against any claims, and paying any damages awarded to the claimant.
In all these scenarios, oil and gas lease insurance can help protect the financial interests of the lessee by providing coverage for legal defense costs, damages, and other expenses associated with these claims. It is essential for oil and gas companies to carefully review their insurance policies to ensure they have adequate coverage for potential lease-related disputes.
Commercial Insurance And Business Industry Classification
- SIC CODE: 1389 Oil and Gas Field Services, Not Elsewhere Classified
- NAICS CODE: 213112 Support Activities for Oil and Gas Operations
- Suggested Workers Compensation Code(s): 1322 Oil or Gas - Well - Cleaning or Swabbing of Wells - By Specialist Contractor - No Drilling & Drivers, 6206 Oil or Gas - Well - Cementing & Drivers, 6214 Oil or Gas - Well - Perforating of Casing - All Employees & Drivers, 6216 Gas or Oil - Lease Work NOC - Natural Gas - By Specialist Contractor & Drivers, 6236 Oil or Gas - Well - Installation or Recovery of Casing & Drivers, 6237 Oil or Gas - Well - Instrument Logging or Survey Work & Drivers
1389: Oil and Gas Field Services, Not Elsewhere Classified
Division B: Mining | Major Group 13: Oil And Gas Extraction | Industry Group 138: Oil And Gas Field Services
1389 Oil and Gas Field Services, Not Elsewhere Classified: Establishments primarily engaged in performing oil and gas field services, not elsewhere classified, for others on a contract or fee basis. Services included are excavating slush pits and cellars; gradings and building of foundations at well locations; well surveying; running, cutting, and pulling casings tubes, and rods; cementing wells; shooting wells; perforating well casings; acidizing and chemically treating wells; and cleaning out, bailing, and swabbing wells. Establishments which have complete responsibility for operating oil and gas wells for others on a contract or fee basis are classified according to the product extracted rather than as oil and gas field services. Establishments primarily engaged in hauling oil and gas field supplies and equipment are classified in Division E, Transportation and Public Utilities. Establishments primarily engaged in oil and gas field machine shop work are classified in Manufacturing, Industry 3599.
- Acidizing wells on a contract basis
- Bailing wells on a contract basis
- Building oil and gas well foundations on a contract basis
- Cementing oil and gas well casings on a contract basis
- Chemically treating wells on a contract basis
- Cleaning lease tanks, oil and gas field on a contract basis
- Cleaning wells on a contract basis
- Derrick building, repairing, and dismantling oil and gas-on a contract
- Dismantling of oil well rigs (oil field service) on a contract basis
- Erecting lease tanks, oil and gas field on a contract basis
- Excavating slush pits and cellars on a contract basis
- Fishing for tools, oil and gas field on a contract basis
- Gas compressing natural gas at the field on a contract basis
- Gas well rig building, repairing, and dismantling on a contract basis
- Grading oil and gas well foundations on a contract basis
- Hard banding service on a contract basis
- Hot oil treating of oil field tanks on a contract basis
- Hot shot service: on a contract basis
- Hydraulic fracturing wells on a contract basis
- Impounding and storing salt water in connection with petroleum
- Lease tanks, oil and gas field: erecting, cleaning, and repairing-on a
- Logging wells on a contract basis
- Mud service, oil field drilling: on a contract basis
- Oil sampling service for oil companies on a contract basis
- Oil well logging on a contract basis
- Perforating well casings on a contract basis
- Pipe testing service, oil and gas field: on a contract basis
- Plugging and abandoning wells on a contract basis
- Pumping of oil and gas wells on a contract basis
- Removal of condensate gasoline from field gathering lines: on a
- Roustabout service: on a contract basis
- Running, cutting, and pulling casings, tubes, and rods: oil and
- Servicing oil and gas wells on a contract basis
- Shooting wells on a contract basis
- Shot-hole drilling service, oil and gas field: on a contract basis
- Surveying wells on a contract basis, except seismographic
- Swabbing wells: on a contract basis
Oil And Gas Lease Insurance - The Bottom Line
To learn more and ensure that your business is properly protected with the right oil and gas lease insurance insurance, speak to a reputable insurance broker that specializes in insuring your industry. Together, you can discuss the different coverage options that are available and ensure that your gas or oil lease business is well-protected.
Additional Resources For Miscellaneous Insurance
Find informative articles on miscellaneous businesses including the types of commercial insurance they need, costs and other considerations.
- Adult Daycare
- Agriculture, Forestry, Fishing & Hunting
- Bail Agent
- Control of Well
- Electric Utilities
- Employment / Staffing Agency
- Engraving Business
- Facility Support Services
- Mail Order
- Oil And Gas Lease
- Personal Concierge
- Photofinishing Lab
- Portable Sanitation
- Private Water Districts
- Process Server
- RV Parks & Campgrounds
- Security Guard
- Surety Bonds
- Waste Disposal Landfill
- Wedding Planner
- Specialty Accident And Sickness / AD&D
- Specialty Amusement Parks And Rides
- Specialty Auctions And Farmers Markets
- Specialty Business Risks
- Specialty Communication
- Specialty Design
- Specialty Drugs And Alcohol
- Specialty Employee Protection
- Specialty Energy
- Specialty Environmental Risks
- Specialty Firearm And Shooting
- Specialty Hazardous Materials
- Specialty Health Risks
- Specialty Machinery And Tools
- Specialty Merchandise
- Specialty Mobile And Modular Homes
- Specialty Motorcycle Risks
- Specialty Natural Disasters
- Specialty Oil And Chemical
- Specialty Prize Indemnification
- Specialty Programs
- Specialty Railroad
- Specialty Security Risks And Equipment
- Specialty Substandard Risks
- Specialty Travel
- Specialty Weather Related
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.