Texas Refinery Insurance Policy Information
Texas 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 Texas 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.
Texas 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.
Why Do TX Refineries Need Insurance?
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 TX refineries may encounter, and as such, it is clear that petroleum refining operations need to consider their Texas refinery insurance coverage options extremely carefully.
What Type Of Insurance Do Texas 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 Texas 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 Texas 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 Texas 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.
TX Refinery's Risks & Exposures
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.
Texas Refinery Insurance - The Bottom Line
To learn more about the exact types of Texas 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.
Texas Economic Outlook & Requirements For Commercial Insurance
If you are considering opening up a business in the Lone Star State, you first want to make sure that it is a sound location for your operations. That means that you should understand some key information related to the state's economy, as well as the types of insurance coverages that businesses are legally required to carry.
Economic Outlook For The State Of Texas
In terms of the economy, Texas offers fantastic news for those who are thinking about starting up a business in this state. That's because the Lone Star State has the second largest economy of all 50 states in the nation. The gross state product is valued at an estimated at over $1.706 trillion in 2022. In 2015, the state was the headquarters for six of the top 50 Fortune 500 companies.
As expected, several industries contribute to the economy of Texas. One of the most notable industries is agriculture. In fact, this state has the highest production of cattle, sheep, and goat products. It is also the largest producer of cotton and cereal crops. Other crops that this state is famed for include cantaloupes, watermelons, and grapefruits.
Other leading industries in the State of Texas include:
- Computer Technology
If you are considering going into business in TX, having an operation in any of these industries will likely afford you success.
Commercial Insurance Regulations For Business Owners In TX
The Texas Department of Insurance regulates is the main insurance regulatory agency in the Lone Star State. Texas is quite lenient when it comes to insurance requirements for business owners. In fact, there is only one type of insurance that business owners are legally required to carry, and that is commercial auto insurance. If you are planning on using a vehicle for anything related to your business, whether it's making deliveries, transporting goods, or meeting with clients, you must have a commercial auto insurance policy.
While Workers' Compensation coverage is required in every other state, in TX, is it not mandated; however, if you decide not to carry this type of coverage, you will be required to offer your employees some type of incentive package in the event that the do become injured or develop a work-related illness.
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
- Flight Schools
- Hot Air Balloon
- Mail Order
- Oil And Gas Lease
- Personal Concierge
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- Printers & Publishers
- Private Water Districts
- Process Server
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- Waste Disposal Landfill
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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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