Oil and Gas – Critical Insurance Protection
It is safe to say that, Oil and Gas operators and contractors are aware that their operations involve risk and liability that must be covered by their insurance programs. The fast moving, constantly changing Oil and Gas industry, and the political and litigious society we live in, can complicate the answer to: who is who and what is what? It is imperative to ensure that the party responsible for a particular exposure in the oilfield is also the party responsible for insuring it.
Most Oil and Gas master service agreements will mandate certain endorsements to a company’s commercial insurance policies. The “Big Three” are: additional insured status, waiver of subrogation and primary/non-contributory coverage. All have their place in insurance and indemnity contracts but could be detrimental if over extended. Additional insured status will increase the amount of insurance available for a particular casualty but, if given in every situation, could stretch a single company’s limit very thin. The addition of a waiver of subrogation is a commonly accepted practice in the oilfield and ensures that one party’s insurer cannot assert a claim against another indemnified party for its share or fault for a casualty. Primary/non-contributory coverage puts the indemnitor’s coverage first in line before the indemnitee’s in a casualty situation. Any insurance company interested in writing business for oilfield operators or contractors will have the ability to add this coverage but may only provide it, “…when required by a written contract.”
An experienced insurance agent and trusted advisor may not be able to mitigate every risk of the Oil and Gas industry. With a full understanding of your business, they should be able to package a group of coverages to satisfy an Oil and Gas master service agreement and allow the business owner to focus on what they do well. The insurance coverages mentioned above are, by no means, an exclusive or comprehensive list of important or necessary endorsements. However, if they are not expressly stated on your policies and you have not been educated on their importance, it makes sense to have a set of professional eyes review your coverage. Please feel free to call Swingle Collins & Associates for a consultative review of your current insurance policies.