The oil and gas industry is highly diverse, with numerous subsets requiring specialised insurance coverage. As a result, insurance for oil and gas professionals and businesses can be complex. In addition to standard policies that most businesses use for protection, oil and gas companies require tailored insurance policies to cover specific equipment and services. These Offshore assets insurance policies safeguard businesses against risks in marine and offshore environments, ensuring operational continuity and financial protection.
Effective safety and risk management should be a top priority for oil and gas companies. Without proper risk management, training, education, and oil field liability insurance, businesses in the industry risk incurring potentially crippling losses. The selected insurance policies should shield organisations and employees from damages, injuries, fines, and expenses linked to their services.
The Primary Categories of Insurance for Oil Companies
Insurance for material damage
Insurance for Material Damage provides coverage for the physical equipment or property of an oil and gas company in case of loss or damage. Standard policies describe this type of insurance and can include coverage for damage caused by accidents, natural disasters, fire, and other perils. The policy can help the company recover the cost of repairs or replacement of equipment or property, minimising financial losses due to unforeseen events.
Loss of Profit Insurance
Loss of profit insurance is a type of policy that covers financial losses that may arise due to temporary interruption of gas or crude oil supply caused by accidental material damage to an oil platform. It is designed to help the insured mitigate the financial impact of such interruptions by indemnifying them of the loss of profits that result from the interruption.
Well-control insurance provides coverage for the expenses incurred while trying to control a wellbore after an explosion. The coverage may include the cost of re-drilling, leakages, pollution causing bodily injury or material damage to a third party, and the costs of environmental clean-up. This type of insurance helps oil and gas companies mitigate the financial risks associated with well-control and blowout incidents.
General Third-Party Liability Insurance
General third-party liability insurance covers claims from injury or property damage to a third party. The insurer is under a legal obligation to provide financial compensation. This policy is essential for businesses that have a risk of causing injury or damage to third-party individuals or property.
Environmental Pollution Insurance
Environmental pollution insurance provides coverage to the insured in case of accidental environmental pollution that results in bodily injury or material damage to a third party. It also covers the costs of environmental clean-up required following the incident. This offshore assets insurance protects against pollution-related liabilities arising from offshore oil rigs, comprehensive insurance coverage is essential for businesses operating in such environments.
Marine insurance can provide protection for materials, products, and equipment that are used by oil companies in the field, in warehouses, and during transport from the perils of the sea, airways, land, etc. Specifically, equipment is expensive and valuable; hence it is important for oil companies to consider marine insurance coverage. There are various types of marine insurance policies available that can be chosen based on the need and customised as per requirement.
Workmen’s Compensation Insurance
Workmen’s compensation insurance indemnifies the insured in the event of an employee’s injury or death during the performance of their duty. This policy provides coverage for medical expenses, disability benefits, and death benefits for the employee’s family.
Hull and Rig Insurance
If an accident, whether it is due to a wreck or a natural disaster, occurs, it could cause significant damage to your oil rig that could cost millions of dollars in repairs or replacements. An oil rig insurance policy can help you cover these costs and avoid a devastating financial loss. However, it’s essential to note that most property policies do not cover structures during the construction process. If you are planning to build a new rig or upgrade your current one, you will need the builder’s risk insurance.
In conclusion, offshore oil platforms face a wide range of risks that can cause significant financial losses. Offshore assets insurance for oil platforms is essential as it safeguards against potential risks and disruptions, ensuring the continuity of oil production. To mitigate these risks, oil companies must take various types of insurance, such as material damage, loss of profit, well control, third-party liability, marine insurance, environmental pollution, and workmen’s compensation insurance.