Oilfield Equipment Haulers: What additional exposures does this bring to a motor carrier?
November 3, 2014
Author: Kenny Klinner, Sales Executive
There are additional exposures that come from operating within the oilfield. Obviously a lot of this depends on what type of work you are actually doing on the oilfield. If you are just delivering a load to the rig site and leaving, the most important coverage is your broadened pollution coverage.
Broadened Pollution is by far the most overlooked coverage. A lot of your insurance companies will offer some sort of “broadened pollution coverage”, however you may not be covered if you have any claim that results in an environmental hazard. I recently was able to get my hands on one of the nation’s largest insurance companies’ “broadened pollution policies”. It states in the policy verbatim: “Covered pollution cost or expense does not include any cost or expense arising out of the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, or escape of pollutants.” So essentially this market is willing to check the box stating you have this coverage, however if you get into a claim they will not be paying for any damages caused from spilling pollutants. A claim resulting in an environmental hazard can cost your company upwards to $500,000. If this were to go uncovered that is a large enough claim to take most companies out of business. Ensure that you have the proper broadened pollution coverage prior to taking jobs affiliated with the oilfield.
If you are already working in the oilfield, you are familiar with the term fracking, this has become a very popular source of business in the oilfield industry. If you are hauling frac water or fuel, odds are that you carry General Liability (GL). However there is a coverage within GL that is normally not included in your standard policy, this coverage is called “Misdelivery of Liquid Products”. This provides coverage during the delivery of any liquid product into a wrong receptacle or to a wrong address or the erroneous delivery of one liquid product for another by an auto. A couple examples would be if your driver dumps fuel into the wrong tank, or water into the incorrect well. If this coverage is excluded on your GL policy, you would have an uncovered claim in these examples so it is very important to review your policy for this additional exposure.
If you are actually servicing the oilfield, there are two types of coverages that should be considered. The first is “down hole coverage”, which covers the replacement cost of scheduled tools while they are below the rotary table in a pre-approved well. The tools are covered for loss or damage while down hole. The main loss event occurs when the assembly becomes stuck in the well bore. The other would be “Riggers Liability Coverage” which will provide you with coverage while you’re lifting, moving and setting down a payload. While most oilfield companies who are already servicing the oilfield are familiar with these two coverages, those of you who are looking into possibly getting into this scope of business should be aware of what coverages you can have to protect your equipment.
Working in the oilfield can be very beneficial to you and your company. However one uncovered claim could cost you big dollars and possibly your business. If you are considering getting involved in this type of operations it is important to consider all aspects of this type of operation to make sure that your insurance covers the additional exposures that are specific to working in or around an oilfield.