Dear readers, how are you? I hope you and your business are always in good shape and continue to grow. We will review liability insurance in the oil and gas industry again this time.
As we all know, Indonesia’s oil and gas industry is an essential sector in national development, meeting energy needs and raw materials for domestic industries and even as a foreign exchange earner.
However, during the operation of the oil and gas industry, it turns out that there are many risks of accidents that can occur at any time. So there is a need for risk management and broader insurance coverage to protect contractors. One insurance guarantee is needed by the oil and gas industry, namely Umbrella Liability insurance. The Umbrella Liability insurance policy coverage is specifically designed to address the great dangers and responsibilities that come their way.
You can read a complete explanation in this article. If this article interests you, please share it with your friends so they can understand it as much as you do.
Understanding Umbrella Liability
Umbrella Liability insurance is an insurance policy that can help cover losses above the limit guaranteed in existing (underlying) insurance policies such as General Liability, Workmen’s Compensation, and Automobile Liability. Because the risk is enormous and can be catastrophic, the Oil and Gas industry needs to have an Umbrella Liability specifically designed to provide maximum coverage in the event of an accident.
Difference between Umbrella Liability and Excess Liability
The difference between Umbrella Liability and Excess Liability is the coverage area. The excess liability policy will work if the limit has expired, while the Umbrella Liability insurance policy can be used as an “ad hoc” if the insurance policy allows it. Umbrella policies can even be used as the primary policy in some industries. So the term Umbrella is how it can protect the insured more than that offered by the primary policy.
The advantages of Umbrella Liability
- Occurrence-based. This guarantee is given based on the time of the accident. Including legal costs due to pollution
- Clean-up costs due to the occurrence of policies originating from oil and gas spills, including on-site activities, equipment in yards, and work sites, provided that the incident is covered under the Underlying Insurance policy.
- Personal injury and property damage due to pollution from sudden accidents, including accidents originating from the site and yard equipment. It provided that the Underlying insurance covers the risk.
- Replacement due to damage to property under the well and equipment. With the condition that the guarantee is guaranteed in the General Liability insurance policy. Suppose the policy is extended with Contractual Liability coverage due to pollution and other claims. Other costs are the responsibility.
- Co-owners submit various claims and claims from the well-being worked on.
- The additional guarantee comes from the other insured if it is in the underlying insurance policy.
The Umbrella Liability insurance policy has the following coverages:
- Body injury and property damage liability
- Personal injury liability
- Advertising injury liability
- Optional excess automobile liability and employers liability
Who Needs This Coverage?
- Drilling contractors
Drilling contractors usually work to carry out drilling operations at the well site. Their responsibilities may include installing well casings, completing wells to prepare for oil or gas production, hydraulic fracturing, and cementing wells for further drilling or abandonment. In carrying out their duties, oil and gas drilling contractors face unique and dangerous daily risks.
This activity requires insurance to protect the equipment, machinery, third-party safety, and the most valuable assets of its employee contractors. Drilling contractors need specific commercial general liability policies to provide cover against sudden and accidental pollution incidents causing bodily injury or property damage to third parties.
Well Control Policies can cover uncontrollable events, such as explosions. They can help cover some of the costs and expenses associated with bringing the well back under control and cleaning up pollution.
- Manufacturers
Manufacturers serving the oil and gas industry are also exposed to various risks, including potentially severe product liability. Insurance companies also offer a range of specialized coverage and services that can help protect against third-party claims, as well as help protect employees and physical assets.
Producers in the oil and gas industry have a high risk of product liability because they produce a wide range of spare parts and equipment used in the oil field. For example, suppose a tool or equipment manufactured by a manufacturer causes harm to someone or recalls the manufacturer’s product due to a defect. In that case, product liability coverage can provide vital protection to cover the manufacturer’s legal fees and other costs.
- Midstream companies
Midstream companies in the oil and gas industry have unique exposures inherent to the industry and require tailored coverage. Midstream oil and gas companies generally have operations involving the storage, processing, and transportation of oil and natural gas.
General commercial liability and contractor equipment policies with coverage specifically designed for middle operations will help protect the business in the event of a loss. For example, a specific commercial general liability policy may cover a sudden and unintentional pollution incident that causes bodily injury or property damage to a third party.
- Operators and Non Operators
Operators and non-operators in the oil and gas industry have specific insurance needs. Insurance companies can provide a variety of coverages and services that can help protect their capital and reduce their risk, both onshore and offshore. As co-owners of the well, non-operators also need a coverage solution that protects their investment.
Oil and gas operators are well owners who have invested capital in oil and gas production. They are responsible for the daily operations of the well project. Inland sea property and coverage for oil and gas operators can protect things like buildings, equipment, and personal business property. Insurance coverage for carriers protects against liability for suspected injury or damage to third parties and covers their contractual obligations.
Although non-operators are not involved in the day-to-day operations of the well project, they are usually contracted with the operator, have an invested interest (as “co-owners”) in the project, and are consulted on exploration and production activities. Insurance coverage for non-operators can help protect property and invest capital in the event of a loss. It can also provide coverage for liabilities arising from claims or lawsuits and cover their contractual obligations.
- Service contractors
An oil and gas contractor has various risks attached to their services, including casing installation, cementing, hydraulic fracturing, rig installation, perforation, tank construction or installation, welding, cutting, and others. They usually require a combination of the coverages described above to provide coverage for losses incurred if equipment or machinery breaks down, an employee is injured at work, or a third party at work is injured.
- Suppliers
A supplier of goods in the oil and gas industry also has unique insurance needs. From sales and services to rental entities, these insurance products are designed to help protect against third-party claims, as well as help protect employees and physical assets.
The main scopes for suppliers in the oil and gas industry are general commercial liability, commercial automobile, and excess liability. General liability coverage can help cover costs incurred due to third-party claims for bodily injury, property damage, and losses arising from sudden and accidental pollution incidents and contractual obligations.
How to Get the Best Umbrella Liability Insurance
The best way to get Umbrella Liability coverage is through an insurance broker. Insurance brokers will step in from starting to register and get competitive quotes. The broker will also assist in the event of a claim.
One of the insurance brokers who are experienced in the field of umbrella liability insurance is L&G Insurance Broker.
For an Umbrella Liability guarantee, contact L&G now!
Source:
- https://www.travelers.com/business-insurance/oil-gas/drilling
- https://lngrisk.co.id/glosari/apa-itu-polis-asuransi-umbrella-liability/
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