Oil And Gas Well Drilling Contractors Insurance

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Oil And Gas Well Drilling Contractors Insurance Policy Information

Oil And Gas Well Drilling Contractors Insurance

Oil And Gas Well Drilling Contractors Insurance. Oil and gas wells are impressive structures constructed with the help of boring operations deeply into the Earth, at carefully-chosen locations, to extract petroleum and natural gas.

Well drilling contractors dig, drill, or repair wells to provide gas or oil. Prior to drilling, a geological study is done to verify the presence of fuels and potential impact to surrounding areas.

Once a site has been granted the necessary permits, the land must be cleared and leveled, access roads must be built, lined pits must be dug to dispose of rock cuttings and mud resulting from drilling, and adequate electrical and water supplies must be located to support the drilling operations.

The drilling contractors will excavate a rectangular area in the ground where the drilling rig is set up. Then they set up the derrick (tower used to give leverage), open a shaft for the pumping equipment and piping, and secure the opening.

The basic process involves a large-diameter bit attached to a drilling pipe. Heavy metal tubes called collars are attached around the drilling pipe to add weight and force the bit deeper. Moist clay-based drilling mud is pumped through the pipe to cool the bit and carry the rock cuttings and samples to the surface for testing.

At pre-set depths, the segments of the piping are removed, and the contractor installs and seals the casing. Casing piping is thick, precast concrete set in sections to prevent collapse in the drilling line. This process is repeated until the samples from the drilling mud show that the oil reservoir has been reached.

If the contractor is involved with offshore drilling rigs, the significant and unique exposures that exist can be handled by specialty carriers. The contractor may remove tubing and other parts from abandoned wells and seal off those that are no longer productive.

The use of hydraulic fracturing, or fracking, to access oil and gas is very controversial due to the use of high-pressure water or other liquid to force cracks into underground rock beds, which may release methane or other pollutants or increase seismic activity. Fracking has been prohibited in several states.

With much of modern society relying on oil and gas, the companies that drill these oil and gas wells - oil and gas well drilling contractors - undoubtedly play a vital role in the global supply chain and economy.

The activities of oil and gas well drilling contractors are both highly specialized and skilled, and it will surprise nobody that this branch of commerce carries a significant amount of risk with it as well.

While proactive measures designed to improve health and safety certainly help mitigate risks, well diggers always need to be prepared for unexpected circumstances. What kinds of oil and gas well drilling contractors might be needed to protect their business interests? Discover more in this brief guide.

Oil and gas well drilling contractors insurance protects well diggers from lawsuits with rates as low as $97/mo. Get a fast quote and your certificate of insurance now.

Below are some answers to commonly asked gas and oil well drilling insurance questions:


How Much Does Oil And Gas Well Drilling Contractors Insurance Cost?

The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small well drillers ranges from $97 to $139 per month based on location, size, revenue, claims history and more.


Why Do Oil And Gas Well Drilling Contractors Need Insurance?

Oil Well Drilling Rig

Regardless of its branch of commerce, all commercial ventures are constantly exposed to a wide variety of risks. Some are minor, while others are associated with such exorbitant costs that they could easily deal a fatal blow to the future of the business.

Not only do oil and gas well drilling contractors face some of the same hazards common to nearly all businesses, they also have to consider a substantial number of risks unique to this industry.

Employees in this line of work may, for instance, fall victim to a large number of occupational injuries and illnesses, ranging from falls to injuries associated with operating heavy machinery, and then hold the company liable. Oil and gas well drilling companies can be faced with lawsuits resulting from concerns about damage to the environment.

In addition, the office premises of these companies remain vulnerable to universal risks such as acts of nature (wildfires, earthquakes, and so on), theft, and vandalism, and essential equipment, such as drilling rigs, may malfunction and require urgent repair or replacement.

These perils - and countless others well diggers could be faced with - are all associated with massive expenses that could, without oil and gas well drilling contractors insurance coverage, prove to be overwhelming. In addition to meeting legal requirements, this is the most pressing reason to carefully evaluate insurance needs.


What Type Of Insurance Do Oil And Gas Well Drilling Contractors Need?

Unfortunately, there is no straightforward answer to this question - each company engaged in oil and gas well drilling will have unique requirements that depend, among other factors, on the jurisdiction in which they are based, the size and scope of their operation, the value of their equipment, and their number of employees.

That is why it is always crucial for companies to consult a reputable commercial insurance broker. Among the core kinds of oil and gas well drilling contractors insurance needed are, meanwhile:

  • Commercial Property - In the event that commercial premises fall victim to perils like acts of nature, vandalism, and theft, the resulting damage to the building and smaller assets within will be covered, making repair and replacement costs easier to manage.
  • Commercial General Liability - To protect against the legal costs, such as attorney fees and medical bills, associated with third party bodily injury and property damage claims resulting from general circumstances (of such a nature that they could have happened anywhere), commercial general liability insurance is vital.
  • Environmental Liability - This type of oil and gas well drilling contractors insurance will help well diggers manage the legal and settlement costs arising from lawsuits alleges that the company caused environmental damage.
  • Equipment Breakdown - This kind of coverage is designed to help companies cover the, often massive, costs arising from the sudden breakdown of important and large equipment.
  • Workers Compensation - Employees within the oil and gas drilling industry face significant risks. If an employee sustains a work-related injury or illness, this form of insurance covers their medical costs along with any income they lose due to related absences from work. Should the worst come to pass, workers comp further covers death benefits.

Because well drilling companies are likely to have further insurance needs, whether in the form of excess liability or commercial auto coverage, it is vital for these companies to carefully consider their oil and gas well drilling contractors options with the help of a commercial insurance broker who understands their industry.


Oil And Gas Well Drilling Contractors' Risks & Exposures

Gas Well Drilling

Premises liability exposures at the contractor's office are generally limited due to lack of public access. Outdoor storage may present vandalism and attractive nuisance hazards.

At the job site, drilling and construction of derricks pose numerous hazards. The area of operation should be restricted by barriers and proper signage to protect the public against trips and falls over debris, equipment, or uneven ground. Construction sites create an attractive nuisance hazard, especially if work is close to residential areas.

Drilling 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 drilling may indicate a morale hazard.

Drilling may strike and ignite gas pockets that can explode unless controls are in place. Upfront geological research and knowledge of the site history is imperative.

Personal injury exposures include assault and battery and invasion of privacy. Background checks should be conducted for any employee who will have regular contact with customers. The use of subcontractors as well as any contractual liability exposures should be examined.

Completed operations exposures may arise from faulty workmanship or improper installation if the well does not supply oil as expected. Improperly installed wells may result in contamination, leaks, property or water damage. Submersible pumps are expensive to replace.

Environmental impairment liability exposures are very high. Drilling may impair groundwater, the dust generated may affect persons and livestock, and disposal of rock cuttings may contaminate water and soil. Hydraulic fracking may pollute air, cause corrosion to metal objects, or be a contributing factor for earthquakes or climate change.

Spillage or leakage of oil or pollutants can result in high cleanup costs and fines. Special permits and approvals must be obtained prior to drilling. The oil digger must adhere to all federal, state and municipal regulations.

Proper written procedures and documentation of both the transportation and disposal process is important. Lack of contingency and containment plans may indicate a morale hazard.

Workers compensation exposures are severe. Back injuries, hernias, sprains and strains can occur from lifting, material handling, or working from awkward positions. 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. Work with hand tools can result in injury such as cuts, scrapes, or puncture wounds.

Underground hazards may arise from striking objects or utilities, the collapse of retaining or holding walls, mudslides and 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.

Additional sources of injury include foreign objects in the eye, repetitive motion injuries, temperature extremes, and auto accidents during transportation to and from job sites. Special hazards may include work at heights, over water, or in remote locations with limited access to medical facilities.

Fire or explosion can occur at the oil or gas well site affecting inland marine, premises liability, and workers compensation. 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.

State and Federal jurisdictional issues may arise in the case of offshore rigs and outer continental locations. It is important to know whether the Longshore and Harbor Workers Act or the Outer Continental Shelf Act applies.

Property exposures at the contractor's own location are usually limited to an office operation and a yard for storage of materials, equipment, and vehicles. There may be extensive computer or laboratory equipment requiring up-to-date electrical wiring.

The equipment and material in the yard is not normally susceptible to damage by fire or weather, but may be subject to vandalism. Scientific devices are subject to breakage and mechanical breakdown.

Welding 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 away from combustibles.

Equipment breakdown exposures are very high. Well digging is dependent on power that is often supplied by generators set up for the project. Breakdown losses may affect the generators as well as electrical control panels and other apparatus.

Breakdown and loss of use to the production machinery could result in severe loss, both direct and under time element.

Inland marine exposures include accounts receivable if the driller offers credit to customers, computers for diagnostic testing and tracking inventory, contractors' equipment taken to job sites, and valuable papers and records for customers' and suppliers' information.

Much of the computerized testing and measuring equipment used is costly and may be susceptible to damage or loss from theft by third parties or employees. Backup copies of all data should be stored off premises.

Drilling equipment can be large and difficult to transport without adequate loading, tie-down, and unloading procedures.

Ground at the drilling 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. Derricks and related equipment may be subject to collapse or damage by high winds or flood surge.

Equipment left at job sites may be targets for theft and vandalism.

Ocean marine exposure will exist if there are offshore oil rigs. Work begins by setting up and operating the drilling rig from a ship or barge, then ends with the erection of the production platform which is used for the actual extraction once oil has been found. Specialty coverages will be needed.

Crime exposures are from employee dishonesty, including theft of customers' goods by the contractor's employee. Background checks, including criminal history, should be obtained on each employee prior to hiring. Ordering, billing, and disbursement should be handled as separate duties with reconciliations occurring regularly.

Commercial auto exposures can be high due to transportation of materials, bulky machinery, and equipment which may require special tie-down procedures. Much of the driving is done on temporary access roads, increasing the risk of collision and overturn.

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.

If debris includes hazardous waste, spillage can result in damage to the environment. Drivers should be aware of and be able to perform cleanup procedures in the event of a collision or vehicle overturn.

Commercial Insurance And Business Industry Classification

  • SIC CODE: 1381 Drilling Oil And Gas Wells
  • NAICS CODE: 213111 Drilling Oil and Gas Wells
  • Suggested ISO General Liability Code(s): 98157, 98158
  • Suggested Workers Compensation Code(s): 6235

Description for 1381: Drilling Oil And Gas Wells

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

Oil And Gas Well Drilling Contractors Insurance - The Bottom Line

To discover the exact types of oil and gas well drilling contractors insurance policies you'll need, what coverage limits you should carry and the associated costs - speak with a reputable broker that is experienced in commercial insurance.

Types Of Small Business Insurance - Requirements & Regulations

Perhaps you have the next great idea for a product or service that you know will appeal to your local area. If you've got a business, you've got risks. Unexpected events and lawsuits can wipe out a business quickly, wasting all the time and money you've invested.

Operating a business is challenging enough without having to worry about suffering a significant financial loss due to unforeseen and unplanned circumstances. Small business insurance can protect your company from some of the more common losses experienced by business owners, such as property damage, business interruption, theft, liability, and employee injury.

Purchasing the appropriate commercial insurance coverage can make the difference between going out of business after a loss or recovering with minimal business interruption and financial impairment to your company's operations.

Small Business Information

Insurance is so important to proper business function that both federal governments and state governments require companies to carry certain types. Thus, being properly insured also helps you protect your company by protecting it from government fines and penalties.

Small Business Insurance Information

In the business world, there are many risks faced by company's every day. The best way that business owners can protect themselves from these perils is by carrying the right insurance coverage.

The The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.

Commercial insurance is particularly important for small business owners, as they stand to lose a lot more. Should a situation arise - a lawsuit, property damage, theft, etc. - small business owners could end up facing serious financial turmoil.

According to the SBA, having the right insurance plan in place can help you avoid major pitfalls. Your business insurance should offer coverage for all of your assets. It should also include liability and casual coverage.

Types Of Small Business Insurance

Choosing the right type of coverage is absolutely vital. You've got plenty of options. Some you'll need. Some you won't. You should know what's available. Once you look over your options you'll need to conduct a thorough risk assessment. As you evaluate each type of insurance, ask yourself:

  • What type of business am I running?
  • What are common risks associated with this industry?
  • Does this type of insurance cover a situation that could feasibly arise during the normal course of doing business?
  • Does my state require me to carry this type of insurance?
  • Does my lender or do any of my investors require me to carry this type of policy?

A licensed insurance agent or broker in your state can help you determine what kinds of coverages are prudent for your business types. If you find one licensed to sell multiple policies from multiple companies (independent agents) that person can often help you get the best insurance rates, too. Following is some information on some of the most common small business insurance policies:

Business Insurance Policy Type What Is Covered?
General Liability InsuranceWhat is covered under commercial general liability insurance? It steps in to pay claims when you lose a lawsuit with an injured customer, employee, or vendor. The injury could be physical, or it could be a financial loss based on advertising practices.
Workers Compensation InsuranceWhat is covered under workers compensation insurance? This type of insurance protects a business and its owner(s) from claims by employees who suffer a work-related injury, illness or disease. Workers comp typically provides the injured employee with benefits to cover medical expenses, a portion of his/her lost wages, rehabilitation costs if applicable, and permanent partial or permanent total disability.
Product Liability InsuranceWhat is covered under product liability insurance? I pays an injured party's settlement or lawsuit claim arising from a defective product. These are usually caused by design defects, manufacturing defects, or a failure to provide adequate warning or instructions as to how to safely use the product.
Commercial Property InsuranceWhat is covered under business property insurance? General liability policies don't cover damages to your business property. That's what commercial property insurance is for. It protects all of the physical parts of your business: your building, your inventory, and your equipment, giving you the funds you need to replace them in the event of a disaster. If you work from home, you might consider a Home Based Business Insurance policy instead.
Business Owners Policy (BOP)What is covered under a business owners policy (BOP)? This is a policy designed for small, low-risk businesses. It simplifies the basic insurance purchase process by combining general liability policies with business income and commercial property insurance.
Commercial Auto InsuranceWhat is covered under business auto insurance? This type of insurance covers automobiles being used for business purposes. This could include a fleet of business-only vehicles or a single company car. In some cases it might cover your car or your employee's car while they're being used for business. These policies have much higher limits, ensuring you can cover your costs if one of these vehicles gets into an accident.
Commercial Umbrella PoliciesWhat is covered under commercial umbrella insurance? This type of policy is a sort of "gap" insurance. It covers your liability in the event that a court verdict or settlement exceeds your general liability policy limits.
Liquor Liability InsuranceWhat is covered under liquor liability insurance? It covers bodily injury or property damage caused by an intoxicated person who was served liquor by the policy holder.
Professional Liability (Errors & Omissions)What is covered under professional liability insurance? This type of business insurance is also known as malpractice oe E&O. It covers the damages that can arise from major mistakes, especially in high-stakes professions where mistakes can be devastating.
Surety BondWhat is covered under surety bonds? Bonding is a contract where one party, the SURETY (who assures the obligee that the principal can perform the task), guarantees the performance of certain obligations of a second party, the PRINCIPAL (the contractor or business who will perform the contractual obligation), to a third party, the OBLIGEE (the project owner who is the recipient of an obligation).


Who Needs General Liability Insurance? - Virtually every business. A single lawsuit or settlement could bankrupt your business five times over. You might also need this policy to win business. Many companies and government agencies won't do business with your company until you can produce proof that you've obtained one of these policies.

Business Insurance Required by Law
Small Business Commercial Insurance

If you have any employees most states will require you to carry worker's compensation and unemployment insurance. Some states require you to insure yourself even if you are the only employee working in the business.

Your insurance agent can help you check applicable state laws so you can bring your business into compliance.

Other Types Of Small Business Insurance

There are dozens of other, more specialized forms of small business insurance capable of covering specific problems and risks. These forms of insurance include:

  • Business Interruption Insurance
  • Commercial Flood Insurance
  • Contractor's Insurance
  • Cyber Liability
  • Data Breach
  • Directors and Officers
  • Employment Practices Liability
  • Environmental or Pollution Liability
  • Management Liability
  • Sexual Misconduct Liability

Whether you need any or all of these policies will depend on the results of your risk assessment. For example, you probably don't need an environmental or pollution policy if you're running an IT company out of a leased office, but you would need data breach and cyber liability policies to fully protect your business.

Also learn about small business insurance requirements for general liability, business property, commercial auto & workers compensation including small business commercial insurance costs. Call us (855) 767-7828.

Additional Resources For Contractors & Home Improvement Insurance

Learn about small business contractor's insurance, including what it covers, how much it costs - and how commercial insurance can help protect your contracting business from lawsuits.


Contractors And Home Improvement Insurance

A contractor that wants to begin or stay in business, liability coverage must be obtained for the premises or operations, off-site locations and products/completed operations exposures. These coverages may be included as a part of a businessowners policy (BOP) or purchased in a commercial general liability (CGL) policy. Owners and contractors protective liability and railroad protective liability coverages may also be required in certain cases in order for a contractor to obtain a particular job.

Physical damage coverage for tools, supplies and equipment, both on and off the contractor's premises, is a concern. Liability exposures at the premises of the contractor, and at the premises of the contractor's customer, must be properly addressed along with completed operations. Business insurance is very important as is workers compensation insurance protection for employees.

Contractors may work under a general contractor as a subcontractor in larger construction projects - like a new commercial site or residential subdivision. They can work on smaller projects directly with a home owner, usually specializing in renovations or remodels.

In business insurance speak, often called 'artisan contractors' or 'casual contractors', they are involved in many aspects of construction and contracting work – and include various trades and skills. Carpenters, painters, plumbers, electricians, roofers, tree trimmers, landscaping are just a few examples. They may do roofing, fencing, drywall, tile work and many other trades that involve skilled work with tools at the customer's premises.

An artisan contractor performs a single trade or job, and each has its own specialized liability needs with its own exposures to risk and accidents. Contractors liability insurance can offer coverage for bodily injury, property damage, advertising injury and medical payments.

Most artisan contractors should have commercial general liability at the very least, but many need broader coverages - like an umbrella to increase their limits of liability, inland marine policy to protect their tools, workers compensation if they have employees, and even commercial auto if they use vehicles for business purposes.

Minimum recommended small business insurance coverage: Business Personal Property, Employee Dishonesty, Contractors' Equipment and Tools, General Liability, Employee Benefits Liability, Umbrella Liability, Automobile Liability and Physical Damage, Hired and Non-owned Auto & Workers Compensation.

Other commercial insurance policies to consider: Building, Business Income with Extra Expense, Earthquake, Flood, Leasehold Interest, Real Property Legal Liability, Accounts Receivable, Builders Risk, Computers, Goods in Transit, Installation Floater, Valuable Papers and Records, Cyber Liability, Employment-related Practicesand Stop Gap Liability.


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