Energy insurance is a type of insurance that helps protect against potential financial losses and liabilities associated with working in the energy industry. This can include coverage for property damage, personal injury, environmental contamination, and other things.
Introduction
The 2005 hurricane season was particularly devastating for the offshore energy sector in the Gulf of Mexico. In fact, it was the worst hurricane season on record, causing billions of dollars in damage. The most costly offshore oil disaster occurred in 1988 when an explosion and resulting fire destroyed the Piper Alpha platform in the North Sea. This disaster killed 167 men and resulted in insured losses totaling $3.6 billion (in 2009 dollars).* The Piper Alpha platform was operated by Occidental Petroleum (Caledonia) Ltd., and it accounted for around 10 percent of the oil and gas production from the North Sea at the time of the disaster.
This increases the importance of Offshore marine insurance policies to protect the business and its assets.
What Does Energy Insurance Cover?
- Physical Damage- This type of insurance provides coverage for physical damage or loss to a company’s offshore property and equipment, including offshore fixed platforms, pipelines, production and accommodation facilities. Other types of equipment, such as offshore loading buoys, may also be Furthermore, this type of insurance is also available for mobile drilling rigs, such as jack-ups, semi-submersibles and drill ships.
- Business Interruption or Loss of Production Income- It provides insurance coverage for energy businesses against loss due to the temporary interruption in oil or gas supply from an offshore facility. This results in a physical loss or damage to the offshore
- Operator’s Extra Expenses– Provides coverage for costs incurred by energy businesses when regaining control of a well after a blowout. Coverage may include redrilling expenses incurred in the restoring or redrilling of a well; and seepage and pollution liability coverage to pay third-party bodily injury, damage to and loss of third-party property, the cost of clean up and defense expenses emanating from a blowout.
- Offshore Construction- Also provides coverage for the various risks that energy businesses face during construction projects. In fact, from project inception to project completion and even beyond.
- Liability- Energy businesses face a wide range of liability exposures. The key coverage includes comprehensive general liability, which ensures coverage for any legal claims that could come up as a result of bodily injury or property damage to a third Another type of coverage that energy businesses need is workers’ compensation, which covers them in case an employee is injured or dies while working.
- Environment or Pollution Liability- It provides coverage for property damage or bodily injury due to pollution or environmental incident from a designated
Concluding Remarks
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