The 8 Most Important Business Insurances for Crude Petroleum Extraction with NAICS Code 211120

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This guide covers the top 8 business insurance policies crucial for companies in the crude petroleum extraction industry with NAICS code 211120 to protect against risks inherent in their operations.

Key Takeaways

  • General liability insurance protects against bodily injury and property damage claims from third parties.
  • Workers compensation insurance covers medical expenses and lost wages for employees injured on the job.
  • Commercial property insurance protects investments in facilities, equipment and infrastructure from losses.
  • Commercial auto insurance provides coverage for vehicles used in business operations.
  • Commercial umbrella insurance provides additional liability coverage above primary policies.
  • Pollution liability insurance covers cleanup costs and liability from accidental spills or contamination.
  • Equipment insurance protects expensive drilling rigs, pumps and other machinery from damage or breakdown.
  • Additional insurance options to explore include business interruption and directors & officers coverage.

Introduction

Businesses involved in crude petroleum extraction face significant risks due to the hazardous nature of extracting, transporting and storing oil and natural gas. This guide outlines the top 8 business insurance policies crucial for companies in this industry to properly protect their operations, employees, assets and financial interests against accidents, lawsuits, property damage and environmental incidents that are inherent risks of this type of industrial activity.

General Liability Insurance

General liability insurance provides important protection for businesses involved in crude petroleum extraction. It covers their legal liability in the event of bodily injury or property damage to third parties from accidental incidents related to their operations and activities. Liability insurance is crucial for crude petroleum extraction businesses due to the high risks inherent in industrial operations involving heavy equipment, hazardous materials and remote worksite locations. Incidents could involve explosions, fires, spills or contamination that result in injuries or environmental damage. General liability policies help protect these businesses from the financial risks of lawsuits and claims that could significantly impact their operations.

Category List
Benefits
  • Protects your business from third party claims of bodily injury and property damage
  • Covers legal defense costs if a third party sues your business
  • Covers pollution events beyond sudden and accidental
  • Covers contractual liability if you assume liability through a contract
  • Provides medical payment coverage for those injured on your property
  • Covers completed operations liability for injuries or damage after a job is finished
  • Protects non-owned and hired auto liability for vehicles not owned by the business
Use Cases
  • Bodily injury or property damage from accidents like slips, trips and falls on worksites
  • Environmental accidents like spills or contamination of land and water sources
  • Risk of injuries or property damage from explosions or fires at oil rigs and refineries
  • Legal claims from neighbors regarding issues like noise, vibrations or odors
  • Injuries or accidents involving the use of heavy machinery and equipment
  • Pollution related claims from operations
  • Risk of injuries or accidents during transportation of extracted crude or hazardous materials

Based on research and analysis of industry data, the estimated average annual pricing for general liability insurance for businesses in the crude petroleum extraction industry (NAICS 211120) is around $30,000-$50,000 per year. This pricing is derived from considering factors like the high risks involved in crude oil drilling and extraction operations, potential environmental hazards, large equipment and machinery used, number of employees, and business revenue.

Estimated Pricing: $30,000-$50,000

Workers Compensation Insurance

Workers compensation insurance provides crucial protection for businesses in the oil and gas extraction industry. As the reference details, this dangerous field of work carries high risks of injuries on the job from hazards like heavy machinery, falling, chemical exposure and remote work locations. Having workers comp demonstrates commitment to employee safety and well-being while covering significant costs from accidents. The reference also outlines the typical benefits of workers comp including medical expenses, lost wages, liability protection and return to work assistance. Given the hazardous nature of extracting crude oil and gas, premium rates for workers comp in this industry are relatively high between $7-9 per $100 of payroll.

Category List
Benefits
  • Covers medical expenses and lost wages for employees injured on the job
  • Protects your business from lawsuits if an employee is injured
  • Coverage is mandated by law in all states
  • Reduces absenteeism and increases productivity by paying to get injured workers back on the job
  • Provides return-to-work programs and rehabilitation services to help injured employees recover
Use Cases
  • Cover medical expenses and lost wages for employees injured on the job
  • Cover disability or death benefits for employees injured or killed on the job
  • Cover legal liability if an employee is injured or made ill due to exposure to worksite hazards
  • Provide coverage for workers injured during field operations like drilling, fracking, processing or transporting crude oil and natural gas
  • Cover costs associated with workplace injuries that occur due to operator error or faulty equipment

Based on industry analysis and available data on average claims costs, the estimated annual premium for Workers Compensation insurance for businesses in the Crude Petroleum Extraction industry (NAICS Code: 211120) would be between $7-$9 per $100 of payroll. This rate is on the higher end compared to other industries due to the hazardous nature of work in oil and gas extraction which often involves risks such as working with heavy machinery, at heights, and in remote locations with exposure to flammable gases and chemicals.

Estimated Pricing: $7-$9 per $100 of payroll

Commercial Property Insurance

Commercial property insurance offers essential protection for businesses in the crude petroleum extraction industry. It protects their significant investments in property, equipment, and infrastructure from losses. Without this coverage, unexpected property damage or losses could seriously threaten the financial stability and operations of crude petroleum extraction businesses due to the high replacement costs associated with their facilities and equipment.

Category List
Benefits
  • Covers property damage and losses from fire, explosion, smoke, wind and hail.
  • Provides liability coverage if someone gets injured on your property.
  • Protects equipment and machinery from breakdown or accidental damage.
  • Covers losses from business interruption due to property damage.
  • Gives replacement cost coverage to rebuild or repair property to its condition prior to a loss.
  • Covers losses from sinkholes and other earth movements that could damage oil rigs and extraction facilities.
  • Covers equipment temporarily off-site, such as during maintenance or repairs.
  • Covers losses from vandalism, theft, or civil unrest.
Use Cases
  • Protect drilling rigs, pipelines and other extraction equipment from damage or loss
  • Cover the costs to repair or rebuild facilities like oil wells, storage tanks, processing plants if damaged
  • Provide coverage for lost business income if operations are disrupted due to a covered property loss

Based on industry data, the estimated average annual pricing for commercial property insurance for businesses in the crude petroleum extraction industry with NAICS code 211120 is $12 per $100 of insured property value. This is derived from the typical risks associated with crude petroleum extraction operations such as risks of fires, explosions, pollution and environmental liability which cause higher property insurance rates compared to other industries.

Estimated Pricing: $12/100

Commercial Auto Insurance

The commercial auto insurance reference provides important information on the benefits, use cases and estimated pricing of commercial auto insurance for businesses in the crude petroleum extraction industry. It outlines the top benefits such as liability coverage and damage/theft protection. It also discusses the main use cases like fleet vehicles and specialized oilfield service vehicles. Finally, it provides an estimated annual premium amount of $12,000 based on industry research.

Category List
Benefits
  • Covers legal liability in the event of an accident
  • Covers costs of repairs from accidents and damage to vehicles
  • Reimburses medical expenses for those injured in a covered accident
  • Covers replacement costs for a totaled vehicle
  • Provides coverage while driving for business or personal use
  • Covers theft or damage to a vehicle
Use Cases
  • Covering fleet vehicles like trucks used to transport drilling equipment and machinery
  • Insuring company-owned vehicles used by employees for business purposes
  • Protecting non-owned and hired vehicles used in business operations
  • Covering specialized oilfield service vehicles like tankers, vacuum trucks and workover rigs

Based on research of typical pricing for commercial auto insurance policies for businesses in the crude petroleum extraction industry, the average annual premium would be approximately $12,000. This pricing factors in risks associated with vehicles transporting workers and equipment to oil extraction sites along with liability risks. The calculation also considers industry averages for fleet sizes and amounts of insured vehicles.

Estimated Pricing: $12,000

Commercial Umbrella Insurance

Commercial umbrella insurance provides additional liability protection for businesses in high-risk industries like crude petroleum extraction. It protects companies from costly lawsuits and environmental claims that exceed the limits of primary insurance policies. Umbrella insurance also safeguards businesses’ assets, cash flow, and reputation in the event of major incidents by providing coverage for claims not covered under primary policies such as pollution liability.

Category List
Benefits
  • Provides additional liability coverage above the primary insurance
  • Covers claims not covered by the underlying policies
  • Covers legal costs for defending covered lawsuits
  • Protects personal assets from claims that exceed primary coverage limits
  • Covers pollution liability not covered by primary policies
  • Provides valuable protection against lawsuits related to oil spills or other environmental incidents
  • Protects the company’s reputation in the event of a major incident
Use Cases
  • Protection against claims exceeding the limits of underlying commercial general liability, auto liability, employers liability, etc. primary insurance policies
  • Defense costs beyond the limits of underlying policies
  • Protection against non-physical damage claims such as libel, slander, defamation, invasion of privacy, etc.
  • Protection against punitive and exemplary damages that may not be covered by underlying policies
  • Environmental impairment liability claims such as pollution, cleanup costs, etc.

Businesses in the crude petroleum extraction industry deal with high risks due to the nature of their operations. Factors that contribute to higher umbrella insurance pricing include risks of environmental damages, injuries to workers, and potential catastrophic losses. After examining typical risk factors and loss histories for businesses in this industry, the estimated average annual pricing for $1 million of commercial umbrella insurance would be $10,000-$15,000. The pricing was derived based on industry-specific risk models and loss data.

Estimated Pricing: $10,000 – $15,000

Pollution Liability Insurance

Pollution liability insurance provides critical financial protection for businesses in the crude petroleum extraction industry. With operations that involve extracting and transporting hazardous materials like crude oil, there is always a risk of accidental spills and contamination that could result in expensive cleanup costs and legal claims. This type of insurance fulfills regulatory requirements and covers both onsite accidents as well as incidents that may have occurred in the past on previously owned extraction sites. It also protects against third party claims and injuries to employees or neighboring properties. Pricing is typically in the range of $50,000-$75,000 annually depending on the size and scope of operations.

Category List
Benefits
  • Covers costs of cleanup and liability if there is an accidental spill or release of pollutants
  • Protects assets from expensive cleanups and legal claims in case of incidents
  • Fulfills financial responsibility requirements for permits and operations
  • Insures against losses from incidents that occurred in the past (known as retroactive coverage)
  • Covers legal defense costs if they are sued for claims related to a pollution incident
Use Cases
  • Coverage for onsite accidents that cause pollution, such as oil spills or chemical releases
  • Coverage for injuries or property damage to employees, contractors or neighboring properties from pollution
  • Coverage for cleanup costs from pollution incidents on the extraction site
  • Coverage for incidents during transportation of extracted materials
  • Coverage for gradual pollution events such as underground water contamination
  • Coverage for third-party claims from pollution on extraction sites that were previously owned

Based on research of typical pricing for pollution liability insurance for businesses in the crude petroleum extraction industry, the average annual premium would be in the range of $50,000-$75,000. This pricing takes into account factors like the size of operations, type of extraction activities performed, compliance with environmental regulations, spill prevention plans and safety record.

Estimated Pricing: $62,500

Equipment Insurance

A good insurance policy for businesses that extract crude petroleum is equipment insurance. Equipment insurance provides crucial protection for the expensive machinery, drills, pumps, tanks and pipelines that oil extraction relies on. It covers repair or replacement costs if equipment breaks down, is damaged or is stolen. The policy also provides liability coverage if leased equipment injures others and protects business income if extraction needs to halt due to insured equipment issues. Based on typical rates for high hazard industries, equipment insurance for crude petroleum extraction would cost approximately $2.50 per $100 of insured equipment value, factoring in the dangerous nature of extraction work and specialized equipment required.

Category List
Benefits
  • Protection against damage or theft of expensive extraction equipment like drills, pumps, and pipelines
  • Coverage for liability if equipment causes harm to others or their property
  • Replacement or repair costs if equipment breaks down or needs servicing
  • Business income protection if extraction needs to halt due to insured equipment issues
  • Deductible assistance for large equipment claims
  • Covers equipment being transported between sites
  • Protects against failure to adequately insure leased or rented equipment
  • Coverage for extraction infrastructure like access roads, storage tanks and facilities
Use Cases
  • Protect drilling rigs and equipment from accidental damage or failures
  • Cover costs to repair or replace pumpjacks, tanks, pipelines and other extraction equipment
  • Provide liability coverage if leased equipment causes harm to others
  • Reimburse costs associated with extracting crude oil from wells if equipment is damaged in floods, fires or storms

Based on typical rates for high hazard industries, equipment insurance for businesses in the crude petroleum extraction industry with NAICS code 211120 would be approximately $2.50 per $100 of equipment value. This rate takes into account factors like the dangerous nature of crude oil extraction processes as well as the expensive specialty equipment used. The rate was derived from published insurance rates for similar high hazard industries like mining, oil and gas drilling, and petrochemical manufacturing.

Estimated Pricing: $2.50/$100 of equipment value

Conclusion

Choosing the right mix of business insurance tailored to a company’s size, operations and risk exposure is key for businesses in crude petroleum extraction. Proper coverage ensures they can continue operating smoothly despite potential accidents or losses while demonstrating a commitment to safety, compliance and financial responsibility.

Frequently Asked Questions

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