Archive for Oil & Chemicals
Coatings and Adhesives Manufacturers
Paints, coatings, and adhesives manufacturers are classes of business in the chemical industry that specialize in producing paints, inks, plastics, adhesives, aerosol containers, lubricants, and resins. Coverages available include general, products, and professional liability, pollution and remediation liability, auto liability, umbrella liability, and workers compensation. Distributors that handle these commodities are also eligible.
Liquefied Petroleum Gas Dealers
Liability insurance on propane and bulk oil dealers requires specialty underwriting. These businesses need insurance coverage at their storage locations as well as off-premises where the fuel is delivered. There is a significant exposure to catastrophic loss and inspecting the facilities is usually a part of the underwriting process.
Offshore Oil Drilling and Service Risks
Property coverage for this class of business is usually written on a named or specified perils basis. There are several different types of offshore rigs, including mobile offshore drilling units and ship-shape floaters, and rigs built on ship hulls. Rigs that are anchored into the seabed and rigs that have submersible oil drilling apparatus pose problems for property insurers. Offshore drilling operations also have significant liability and workers compensation exposures. Workers compensation requires United States Longshore and Harbor Workers Act and Jones Act coverage and must have sufficiently high limits to protect the owners, operators, and drilling contractors and their employees. The threat of water pollution from offshore oil drilling operations adds to an already difficult and complicated insurance coverage arrangement.
Oil and Gas Deficiency Insurance: Guaranteed Performance
Developers and investors whose oil and gas fields do not produce as expected can still get a return on their investments with oil and gas deficiency insurance. If the field’s actual output falls short of engineering report projections, the financial institutions, independent oil producers, individuals, or partnerships are indemnified for the loss. Fields with proven reserves that currently yield through at least three producing wells can also qualify for this insurance. Operators must provide equipment needed for the operation and maintain it in good condition. There is no coverage for inadequate cash flow due to price fluctuations, excessive supply, rising petro-loan interest rates, profit or loss from tax risk, environmental regulations that impede production, operating expenses, hazards, and other uninsurable risks.
Oil Drilling Equipment
Property coverage written on special “”all risk”” as well as named perils coverage forms protect the owner, lessee, or lessor of land-based drilling rigs, portable well service equipment, exploration vehicles, and work-over rigs for loss or damage to this equipment. Ocean marine coverage forms and policies insure offshore drilling rigs, barges, and service craft.
Oil Drilling Rigs and Well Servicing Equipment
Oil drilling rigs and other equipment necessary to service oil wells present substantial values.
Oil Jobbers/Petroleum Distributors
Petroleum distributors face many risks. The primary concern related to property is damage to their equipment by fire and explosion. Large distributors and even oil and gasoline service stations face the difficult liability exposure of pollution from underground oil or gasoline storage tanks. A number of insurers write a full package of coverages for oil jobbers and distributors, including commercial general liability, commercial auto, property, and workers compensation. Coverage is available for retail service stations, wholesale operations, bulk stations, and products being transported in tankers to and from bulk oil and LPG stations to retailers.
Oil Landmen and Lease Brokers E&O
This coverage is tailored to meet the specific needs of oil landmen. They provide title search and oil lease purchasing services on behalf of clients who are beginning to develop oil properties. This errors and omissions coverage insures the landman’s errors and omissions.
Oil Lease Property (Oil Field Equipment)
Property coverage is available on special “”all risk”â€ type or named perils coverage forms that insure wellhead equipment, oil-gas separators, oil tanks, gas compressors, treating plants, pump stations, gasoline-sulfur recovery plants, and similar oil field service equipment that are commonly used at oil lease sites.
Oil Well Liability
This commercial general liability coverage form insures oil well drilling operators, contractors, pipeline owners, and fabricators for bodily injury and property damage that arise from their ownership, operation, or use of oil wells.
Operators Extra Expense: Oil and Gas
Oil and gas producers have increased their exploration, drilling, and production activities. The risk/reward ratio of these drilling efforts is matched by concerns about environmental accidents and damage to equipment. Operator’s extra expense insurance is designed to cover the cost of well control, seepage, and pollution, removing and nullifying, cleanup and containment, and re-drilling expenses as a result of a blowout. Coverage can be endorsed to cover underground blowouts, “unlimited” re-drilling, and offshore operations.
It can be difficult to place commercial general liability and products liability coverage for paint, coatings, inks, and adhesive manufacturers. Like chemical manufacturers, these risks are more hazardous than most manufacturing operations due to exposures to toxic substances, the potential of accidental emissions and fire/explosion hazard. Loss control is a very important service that should be provided.
Painting: Exterior Contractors
The type of structure being painted and its location largely determines the loss potential for this class of business. Bridge painters must contend with traffic, wind, and working at heights. Commercial building painters must contend with traffic congestion and pedestrians. The type of paint used and exposure to its fumes are additional concerns. Paint overspray is always a concern but may not be insurable in every case.
Coverage for large petrochemical operations is usually handled by specialists who are familiar with the engineering and management of large concentrations of specialized equipment used to manufacture chemicals derived from petroleum or natural gas. Loss exposures such as fire, explosion, earthquake, tornado, or hurricane must be underwritten carefully because they represent catastrophic exposures because of the values exposed and the volatility of the manufacturing process and the products manufactured. Property, commercial general liability, workers compensation, and pollution liability are some of the exposures covered. Excess of loss plans, high deductibles, and layered coverage are commonly used with this class of business. A number of pools and captive companies are markets for higher excess coverages.
Chemical, gas, and petroleum companies that manufacture or extract their products from beneath the earth’s surface invest millions of dollars to construct both overhead and underground pipelines to transport their products from one point to another. Pipelines are exposed to fire, flood, soil erosion, landslide, earthquake, rupture, collision, and explosion. Pipelines beneath bodies of water may also be subject to damage from passing vessels. Insurance coverage is usually written on an “all risks” basis for buildings, the pipelines themselves, meters, machinery, pumping stations, and tanks. Only insurance companies that have high property capacity write pipeline risks.
Products Liability: Hazardous or New Products
Drugs, cosmetics, chemicals, burglar and fire alarm equipment and ladders are some examples of hazardous products. The products liability market for these and other hazardous products is relatively small. Similarly, very few standard markets are interested in insuring new types of products, particularly drugs. The same approach is taken when covering hazardous and/or new products in that a complete description of the product along with complete chemical and/or engineering reports must be provided.