Refinery Insurance

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Refinery Insurance Policy Information

Refinery Insurance

Refinery Insurance. Oil refineries, also called petroleum refineries, are industrial plants in which crude oil is processed to create byproducts such as petroleum, gasoline, kerosene, and asphalt. In addition to complex processing plants, oil refineries will also feature large-scale storage facilities and a piping systems.

Refineries take unprocessed petroleum, fossil fuel or crude oil, add or treat it with chemicals, remove the natural gas, and then heat it to remove the excess water, moisture, waste solids, and contaminants.

Refineries may operate 24 hours a day, 7 days a week. Once the refining process is complete, the petroleum and natural gas usually are stored in large tanks in the yard until ready for transport. Some refineries use pipelines as a distribution method.

Since so much of the world economy depends on petroleum products, there is no question that oil refineries play a vital role in modern society. These operations also, however, face a wide variety of serious risks - and each mishap an oil refinery falls victim to may result in devastating financial consequences.

What types of refinery insurance coverage might these industrial operations require to protect themselves? For answers, keep reading.

Why is insurance important for refinery? What type of coverage do you need? Below, you'll find the answers to these questions and more so that you can make sure that you, your employees, the people that you serve - and your business as a whole - are properly protected.

Refinery insurance protects your petroleum refining business from lawsuits with rates as low as $747/mo. Get a fast quote and your certificate of insurance now.

Below are some answers to commonly asked oil refining insurance questions:


How Much Does Refinery Insurance Cost?

The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small petroleum refiners ranges from $747 to $1079 per month based on location, size, revenue, claims history and more.


Why Do Refineries Need Insurance?

Crude Oil Refinery

Given the value of the assets owned by oil refineries, this question answers itself loudly and clearly. Commercial ventures, generally speaking, require insurance for a variety of key reasons - to meet legal requirements, to secure lender cooperation, to protect themselves from the costs of property damage and loss, and to safeguard themselves against lawsuits.

Although oil refineries operate on a grander scale than many other businesses, they are, in this regard, no different.

Oil refineries could be impacted by serious accidents that lead to extensive property damage and environmental harm. They could be hard-hit by acts of nature like earthquakes and wildfires, which are difficult to predict and even harder to protect against. Various kinds of theft and vandalism, such as employee theft or digital data breaches, are other threats. Essential equipment may malfunction and require urgent repair or replacement.

Then, there are numerous liability risks. These may range from situations in which employees suffer work-related injuries or illnesses related to exposure to hazardous substances to third parties becoming hurt on the premises and alleging that the refinery's negligence was the cause.

Insurance plays an absolutely essential role in reducing the costs associated with all these, and other, perils that refineries may encounter, and as such, it is clear that petroleum refining operations need to consider their refinery insurance coverage options extremely carefully.


What Type Of Insurance Do Refineries Need?

Navigating the process of obtaining adequate commercial insurance is always a difficult task, but for a branch of industry as fraught with risk and uncertainty as the oil industry, the complexity increases.

Numerous factors, ranging from the location of the refinery to the shipping methods, and from the volumes processed to the value of a refinery's equipment and its number of employees, determine an oil refinery's insurance needs.

While commercial insurance brokers who specialize in the oil industry ultimately help an oil refining businesses craft the refinery insurance plan that will best serve them, these core types of insurance are usually always needed:

  • Commercial Property - This form of insurance covers the costs of property damage and loss following perils such as acts of nature, accidents, theft, and fire. Because these policies are extremely diverse in what they cover, special attention should always be paid when selecting the best plan.
  • Commercial General & Excess Liability - Commercial general liability coverage helps companies manage the legal costs associated with third party bodily injury and property damage claims. Companies engaged in activities with high risk profiles, such as oil refineries, will further require excess liability insurance. This additional insurance essentially picks up where general liability coverage runs out.
  • Inland Marine - Designed to safeguard valuable goods, including crude oil and specialized equipment, as it they are transit, this form of refinery insurance will likewise be essential to oil refineries in case of collisions, other accidents, theft, and vandalism.
  • Environmental Liability - To protect themselves from the exorbitant costs associated with lawsuits in which it is alleged that the company was responsible for inflicting damage to the environment, environmental liability insurance has an important function in managing the financial aftermath of potential spills and other incidents.
  • Workers Compensation - This form of coverage protects both companies and their employees. Whether due to accidents that lead to physical trauma or occupational exposure to hazardous chemicals used in oil processing, workers' comp covers the costs arising from occupational injuries. That may mean medical bills and sick leave, but also, in the most extreme of circumstances, death benefits.

These are merely examples of the kinds of refinery insurance that petroleum refining companies need to carry to protect their financial health.

Commercial insurance brokers specializing in the oil industry are able to offer detailed advice to any individual refinery, based on their unique circumstances.


Refinery's Risks & Exposures

Oil Refinery

Premises liability exposure is extremely high due to the potential for a catastrophic event such as an explosion. While refineries are generally located away from residential and business areas, toxic chemicals could be dispersed over a wide area, damaging property and causing bodily injury.

Access to the refinery should be restricted by fences and adequate security monitoring as they may be targeted by environmental activists or terrorists.

Products liability exposure could be serious if a contaminant is introduced during the refining processed and passed on to consumers. Contaminated fuel can cause an engine to fail, which could be a problem with vehicles, but even more deadly with airline fuel. Quality control is critical. .

Environmental impairment exposure is severe due to the potential for air, water and ground pollution.

The industry's products are regulated by the Environmental Protection Agency (EPA) and are subject to rigorous standards regarding the composition of finished products, such as gasoline and diesel fuels. Disaster planning is critical to minimize the environmental effects of a chemical leak or an explosion.

Workers compensation exposures are extreme. Employees work with chemicals that can result in burns or eye, skin, or lung irritation. Falls from heights, cuts, burns, lung damage, and lifting injuries are possible.

An explosion could result in a large number of workers being killed. Since refineries may operate 24 hours a day, 7 days a week, adequate supervision is required for all workers.

Training, careful monitoring, use of safety equipment and adherence to strict disciplines are the only way to prevent accidents that can maim or kill.

Property exposure is extremely high because of the flammable gases and liquids that are part of the process. Explosions are the primary cause of refinery fires, and may result in loss of use of the entire facility. Ignition sources should be separated from areas where petroleum is being processed as a fire may result from a vapor leak.

Refining equipment is very expensive, and the value of finished goods continues to increase exponentially. While crude oil is not highly flammable, finished products such as gasoline or diesel fuel are highly combustible. Crude oil may take a while to begin burning but is incredibly difficult to extinguish.

Fire suppression systems and tight controls are part of any refinery. The potential for theft and vandalism can be high due to its value. Alarms, premises controls, and other security measures are needed to prevent unauthorized access.

Business income exposure is severe as the entire facility may be shut down after a loss. Rebuilding could take years, not months, and an alternative production facility is not likely to be available.

Equipment breakdown exposure is severe due to the use of boilers and heavy equipment during the refining process. Operators may be required to be licensed. Safety valves should be in place and tested regularly.

Crime exposure is from employee dishonesty. All ordering, billing and disbursements must be handled as separate job duties and regularly audited. Background checks should be conducted prior to hiring any employee. Physical inventories should be conducted on a regular basis.

Inland marine exposures include accounts receivable, computers, goods in transit, and valuable papers and records. High-valued computers may be used to run the refinery operations. Computers should be regularly inspected and data backed up.

Pipelines may extend over hundreds or thousands of miles of rough terrain. These are subject to weather conditions, vandalism, and natural disasters.

Commercial auto exposure is high if the operation does any pickup or delivery of unprocessed petroleum or finished products. All drivers transporting goods must have appropriate HAZ-MAT licenses, and their MVRs should be reviewed on a regular basis. Vehicles should be regularly maintained, with documentation retained.

An awareness of cleanup techniques should be required. Routes must be laid out to prevent potential overturns, which can result in high cleanup and decontamination costs. Private passenger vehicles may be provided to executives or sales representatives, requiring standards for personal use.

Commercial Insurance And Business Industry Classification

  • SIC CODE: 2911 Petroleum Refining
  • NAICS CODE: 324110 Petroleum Refineries
  • Suggested ISO General Liability Code(s): 15733
  • Suggested Workers Compensation Code(s): 4740

Description for 2911: Petroleum Refining

Division D: Manufacturing | Major Group 29: Petroleum Refining And Related Industries | Industry Group 291: Petroleum Refining

2911 Petroleum Refining: Establishments primarily engaged in producing gasoline, kerosene, distillate fuel oils, residual fuel oils, and lubricants, through fractionation or straight distillation of crude oil, redistillation of unfinished petroleum derivatives, cracking or other processes. Establishments of this industry also produce aliphatic and aromatic chemicals as by-products. Establishments primarily engaged in producing natural gasoline from natural gas are classified in mining industries. Those manufacturing lubricating oils and greases by blending and compounding purchased materials are included in Industry 2992. Establishments primarily re-refining used lubricating oils are classified in Industry 2992. Establishments primarily engaged in manufacturing cyclic and acyclic organic chemicals are classified in Major Group 28.

  • Acid oil, produced in petroleum refineries
  • Alkylates, produced in petroleum refineries
  • Aromatic chemicals, made in petroleum refineries
  • Asphalt and asphaltic materials: liquid and solid produced in
  • Benzene, produced in petroleum refineries
  • Butadiene, produced in petroleum refineries
  • Butylene, produced in petroleum refineries
  • Coke, petroleum produced in petroleum refineries
  • Ethylene, produced in petroleum refineries
  • Fractionation products of crude petroleum, produced in petroleum
  • Gas, refinery or still oil produced in petroleum refineries
  • Gases, liquefied petroleum produced in petroleum refineries
  • Gasoline blending plants
  • Gasoline, except natural gasoline
  • Greases, lubricating: produced in petroleum refineries
  • Hydrocarbon fluid, produced in petroleum refineries
  • Jet fuels
  • Kerosene
  • Mineral jelly, produced in petroleum refineries
  • Mineral oils, natural: produced in petroleum refineries
  • Mineral waxes, natural: produced in petroleum refineries
  • Naphtha, produced in petroleum refineries
  • Naphthenic acids, produced in petroleum refineries
  • Oils, partly refined sold for rerunning produced in petroleum
  • Oils fuel, lubricating, and illuminating produced in petroleum
  • Paraffin wax, produced in petroleum refineries
  • Petrolatums, produced in petroleum refineries
  • Petroleum refining
  • Propylene, produced in petroleum refineries
  • Road materials, bituminous: produced in petroleum refineries
  • Road oils, produced in petroleum refineries
  • Solvents, produced in petroleum refineries
  • Tar or residuum, produced in petroleum refineries

Refinery Insurance - The Bottom Line

To learn more about the exact types of refinery insurance policies you'll need, how much coverage you should carry and the costs, consult with a reputable agent 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 Miscellaneous Insurance

Find informative articles on miscellaneous businesses including the types of commercial insurance they need, costs and other considerations.


Miscellaneous Business Insurance

An insurance contract is an agreement where one party obligates itself to make good the financial loss or damage sustained by a second party when a designated event occurs. The event must be fortuitous and happen by accident. The named insured must have insurable interest at the time of loss. One final point is that in order for any contract to be considered insurance, there must be a risk of loss.

Fortuitous Event - An occurrence largely beyond the control of any involved party; happening by chance; accidental; for example: fire, lightning, windstorm, explosion or flood.

Insurable Interest - In order to recover from a loss to property, the holder must have an insurable interest in the property at the time of the event or occurrence. An insurable interest is any right, title or interest in property where the holder of that right, title or interest sustains financial loss if the property is damaged or destroyed. Any lawful and substantial economic interest in the safety or preservation of the property from loss, destruction or damage also constitutes an insurable interest.

An entity does not have to be the property owner to have an insurable interest in it. Examples include, but are not limited to, mortgagees, trustees, vendors, lessees and bailees. Insurable interest for any entity must exist at the time the loss occurs.

Risk Of Loss - If property could never be destroyed, there is no risk of loss. If property must necessarily disintegrate or be destroyed, there is no risk of loss. Between these two extremes is the exposure of risk that can be insured.


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