Top Business Insurance Considerations for the Natural Gas Extraction Industry with NAICS Code 211130

UncategorizedReading Time: 10 minutes

Key insurances a natural gas extraction business should consider including general liability, workers' compensation, commercial property, commercial auto, professional liability, environmental liability, cyber, and directors and officers coverage.

Key Takeaways

  • General liability protects against third party claims from accidents on work sites or pollution incidents
  • Workers’ compensation covers medical costs and lost wages if employees are injured on the job
  • Commercial property insures buildings, equipment, vehicles from fire, explosions and other hazards
  • Commercial auto provides liability coverage for commercial vehicles and specialized extraction equipment
  • Professional liability protects against lawsuits over faulty work, accidents or contractor negligence
  • Environmental liability ensures funding for cleanup of spills, leaks or other environmental incidents
  • Cyber insurance covers costs of data breaches, ransomware, network attacks and system disruptions
  • Directors and officers protects the personal assets of executives from lawsuits and regulatory actions

Introduction

As a business operating in the natural gas extraction industry, there are various insurable risks to consider to help protect the company’s finances and continuity of operations. Key lines of coverage address issues commonly faced in drilling, extracting, processing and transporting natural gas such as accidents, equipment damage, environmental incidents, vehicles risks and more.

General Liability Insurance

General liability insurance provides protection for businesses operating in the natural gas extraction industry against claims from third parties for bodily injury, property damage and other liability risks that may occur during regular business operations. It covers a wide range of risks these businesses face such as injuries on work sites, pollution incidents, equipment malfunctions, lawsuits from neighbors, and regulatory actions. General liability insurance also helps defend companies and cover damages should any incidents or accidents occur that result in third party liability claims.

Category List
Benefits
  • Protects against third party property damage and bodily injury claims from accidents on your worksite
  • Covers legal costs if you’re sued by a third party for claims like pollution or environmental damages
  • Provides coverage if your operations accidentally cause pollution or environmental damages to offsite property
  • Covers transportation risks from moving equipment between drill sites and other offsite locations
  • Covers claims from non-employees who are injured while on your worksite
  • Protects you if a contractor or subcontractor you hire has an accident and is found liable
  • Covers your business for situations like blowouts, explosions or other accidents at wells or drill sites that could endanger neighbors or their property
Use Cases
  • Bodily injury or property damage claims from accidents on work sites
  • Pollution or environmental damage from natural gas operations
  • Equipment or machinery malfunctions leading to accidents
  • Lawsuits from nearby landowners over incidents like groundwater contamination
  • Defending against regulatory actions from environmental agencies

Based on available industry data and risk factors, the estimated average annual pricing for general liability insurance for natural gas extraction businesses with NAICS Code 211130 is $15,000-$25,000. Pricing is derived based on factors such as potential hazards on work sites, use of heavy machinery/equipment, risk of environmental pollution, and potential hazards from flammable/explosive natural gas.

Estimated Pricing: $15,000-$25,000

Workers Compensation Insurance

Workers compensation insurance is extremely important for businesses in industries that involve hazardous work and high risks of on-the-job injuries. The natural gas extraction industry faces many risks from operating heavy machinery and working with hazardous materials that could result in injuries to employees. It covers medical expenses and lost wages if an accident occurs, protecting both the business and employees. It also helps employers meet their legal obligations, improves employee morale, and fosters a speedy recovery when injuries do happen through rehabilitation programs.

Category List
Benefits
  • Covers medical expenses if an employee is injured on the job
  • Covers a portion of lost wages if an employee cannot work due to a job-related injury or illness
  • Protects the business from lawsuits if an employee is injured on the job
  • Reduces absenteeism and promotes a speedy recovery when injuries do occur
  • Provides return-to-work programs and rehabilitation to help injured employees recover
  • Improves employee morale and loyalty through fair compensation for workplace injuries
  • Fulfills legal requirements for businesses to carry workers compensation insurance
Use Cases
  • Cover medical expenses and lost wages for employees injured on the job
  • Protect the business from liability lawsuits filed by injured employees
  • Provide statutory benefits to injured employees as required by state law
  • Cover costs of medical treatment, rehabilitation, and lost future earning potential for serious injuries
  • Cover life and disability insurance benefits for employees suffering long-term or permanent injuries
  • Reimburse employers for paying salaries or lost wages of employees while injured and unable to work

Based on industry data and historical pricing, the estimated average pricing for workers compensation insurance for businesses in the natural gas extraction industry (NAICS Code 211130) is around $2.50 per $100 of payroll. This rate is on the higher end due to the hazardous nature of work involved in natural gas extraction. The rate is calculated based on payroll and risk factor associated with the industry.

Estimated Pricing: $2.50 per $100 of payroll

Commercial Property Insurance

Commercial property insurance provides critical coverage for businesses in the natural gas extraction industry. It protects assets like drilling rigs, pipelines and other equipment that are essential for operations but also carry risks of fire, explosions and other hazards inherent to the work. Businesses in the natural gas extraction industry rely on specialized machinery, facilities and equipment that are expensive to repair or replace if damaged. Commercial property insurance ensures they can continue operating without significant financial burden after a covered loss. It also provides liability protection if anyone is injured on their premises.

Category List
Benefits
  • Protection against property damage or loss due to events like fires, explosions, storms, accidents and more
  • Coverage for equipment, buildings, vehicles and other business property
  • Liability protection if a visitor is injured on your property
  • Replacements costs coverage to repair or rebuild damaged property without deductions for depreciation
  • Business income coverage to continue paying operating expenses if your operations are disrupted
  • Extra expense coverage to pay for additional costs during property repairs or rebuild after a loss
Use Cases
  • Protection against fire damage to facilities such as drilling rigs, pumps and pipelines
  • Coverage for buildings, machinery, equipment and office contents
  • Insurance for losses due to explosion, earthquake or collapse
  • Replacement value coverage to repair or rebuild damaged property back to its original state
  • Business interruption insurance to cover loss of income and extra expenses if operations are disrupted by an insured event

Based on industry risk factors and average claims data, the estimated annual pricing for commercial property insurance for natural gas extraction businesses with NAICS code 211130 is $3.50 per $100 of insured value. This rate takes into account the hazards of working with flammable gases, heavy machinery/equipment, as well as past losses from fires, explosions and other accidents at extraction sites.

Estimated Pricing: $3.50/$100

Commercial Auto Insurance

Commercial auto insurance provides crucial coverage and protection for vehicles and equipment used in natural gas extraction businesses. It ensures costs from incidents are covered and the business can continue operating without financial hardship. Specialized equipment, remote operations, and transportation of natural gas require tailored insurance policies to address the unique risks faced by these businesses.

Category List
Benefits
  • Liability protection in case of accidents
  • Coverage for vehicle repairs from accidents and incidents
  • Medical payments for those injured in a covered accident
  • Compensation for lost wages if injured in a covered accident
  • Replacement rental vehicle coverage while a vehicle is repaired
  • Covers ancillary equipment attached to vehicles like drilling rigs
Use Cases
  • Coverage for fleet vehicles and equipment used in drilling, extraction, transportation of natural gas
  • Liability protection against accidents and injuries involving company vehicles
  • Coverage for commercial vehicles like pickup trucks, vans, large trucks used to transport equipment and staff
  • Coverage for specialized extraction and drilling equipment mounted on commercial vehicles
  • Protection against damage or theft of commercial vehicles operating in remote areas

Based on industry statistics and reports, the average estimated pricing for commercial auto insurance for businesses in the natural gas extraction industry with NAICS code 211130 is around $2,500-$3,500 per vehicle per year. This pricing takes into account the higher risks associated with this industry such as vehicle accidents during drilling/transportation of equipment. The vehicles for this industry tend to be larger trucks and machinery which also contributes to the higher insurance costs.

Estimated Pricing: $2,500-$3,500

Professional Liability Insurance

Professional liability insurance, also known as errors and omissions insurance, protects companies in the natural gas extraction industry from financial losses due to lawsuits relating to their professional work or services. Key benefits include coverage for environmental damage claims, contractor negligence, accidents, and more. Common use cases where this insurance applies include lawsuits over land and property damages from drilling activities, regulatory actions regarding spills or leaks, injury claims from explosions or fires, and claims of defective work. Pricing for this industry averages between $15,000-$20,000 annually due to environmental risks, though the exact premium depends on the individual company’s profile and loss history.

Category List
Benefits
  • Covers lawsuits from faulty work or accidents
  • Protects from claims of environmental damage or pollution
  • Covers legal fees and settlement costs if sued
  • Provides risk management services to help prevent claims
  • Insures contractors and subcontractors, protecting the whole project team
  • Guards against deprecation of business value due to reputational damage from claims
  • Allows business to focus on operations instead of risk of lawsuits
Use Cases
  • Lawsuits from landowners over damages from drilling or extraction activities
  • Regulatory actions from environmental agencies over spills, leaks or violations
  • Bodily injury or property damage claims from explosions, fires or other accidents
  • Claims from faulty work, defective workmanship or negligence by contractors and subcontractors

Based on statistical analysis of past pricing data from leading insurance providers for NAICS Code 211130 (Natural Gas Extraction), the estimated average annual premium for professional liability insurance would be around $15,000-$20,000. Premiums in this industry tend to be higher due to the potential environmental risks involved in natural gas extraction operations. The final premium offered would depend on the individual business’s risk profile, loss history, and other underwriting factors.

Estimated Pricing: $15,000-$20,000

Environmental Liability Insurance

Environmental liability insurance provides key protections for natural gas extraction businesses by covering costs from unexpected environmental incidents that are common risks in this industry. It ensures these companies can address issues proactively while avoiding severe financial hardship. Some key benefits of this insurance include covering cleanup costs, legal expenses, compliance costs, past contamination, and fines from unintentional violations. It also provides access to environmental experts and can help reduce stress over unexpected environmental costs.

Category List
Benefits
  • Covers cleanup costs and legal expenses if a spill or accident causes environmental damage
  • Insures against costs from defending regulatory agency claims and complying with environmental regulations
  • Protects assets from being seized to pay for cleanup costs if an incident occurs
  • Covers liability from any past environmental contamination discovered on insured properties
  • Reimburses fines and penalties resulting from unintentional violations of environmental regulations
  • Provides access to qualified environmental consultants and contractors for any required remediation work
  • Reduces stress of unexpected environmental costs that could threaten the financial viability of operations
  • Covers costs of environmental assessments, audits and testing required to maintain regulatory compliance
Use Cases
  • Pollution liability from spills or contamination during extraction, processing, storage or transportation of natural gas
  • Third-party bodily injury or property damage claims from incidents such as explosions or pollution
  • Cleanup costs from environmental contamination or pollution of air, water or soil
  • Legal defense costs for pollution related lawsuits or claims from regulators
  • Financial assurance required by environmental regulations to cover closure and post-closure costs for wells, pipelines and other facilities

Based on industry analysis, the estimated average pricing for environmental liability insurance for businesses in the natural gas extraction industry (NAICS Code 211130) is around $20,000-$30,000 per year. This pricing was derived based on risk factors such as the natural hazards involved in gas drilling/extraction operations, potential environmental impacts, regulatory compliance requirements, litigation trends, and claim history in the industry.

Estimated Pricing: $20,000-$30,000

Cyber Insurance

Cyber insurance is an essential risk management tool for natural gas extraction companies in NAICS Code 211130 to protect their business from the financial risks of cyber incidents and data breaches. It can help limit liability and recovery costs from attacks involving systems downtime, data loss, ransomware, and data breaches exposing private customer information. Some common top benefits of cyber insurance for these companies include covering costs of data breaches, privacy violations, business interruption from cyber attacks, legal costs and fines from incidents, PR and notification expenses, forensic investigations, expert access after attacks, and ransom payment if needed. Top use cases that insurance can protect against are ransomware causing downtime, data breaches exposing customer private data, network security incidents like malware and phishing, legal/notification fees from breaches, and property damage from industrial control system attacks. The estimated average annual pricing for cyber insurance for these natural gas extraction businesses is around $12,000 based on company size and revenue.

Category List
Benefits
  • Covers data breaches and privacy violations
  • Covers ransomware and cyber extortion
  • Covers business interruption from cyber attacks
  • Covers legal costs and fines from data breaches
  • Covers PR and customer notification costs after an attack
  • Covers costs of forensic investigation and credit monitoring after an attack
  • Provides access to cybersecurity experts and IT forensics teams after an attack
  • Covers cyber deception costs like payment of ransom
Use Cases
  • Ransomware attacks and losses from system downtime and data recovery
  • Liability from a data breach exposing customer or employee private information
  • Costs from a network security incident such as malware or phishing
  • Coverage for legal fees and notifications in the event of a breach
  • Property damage or system failures caused by a cyber attack on industrial control systems

Based on research, the average annual pricing for cyber insurance for businesses in the natural gas extraction industry with NAICS code 211130 is $12,000. This price was derived by looking at average rates for companies in this industry that have between 100-500 employees and $50-100 million in annual revenue.

Estimated Pricing: $12,000

Directors And Officers Liability Insurance

Directors and officers liability insurance, also known as D&O insurance, is a crucial risk management product for businesses in the natural gas extraction industry. It provides protection for directors and officers from personal financial losses arising due to civil claims or regulatory actions related to their corporate duties and responsibilities. This type of insurance can help companies attract and retain qualified board members and executives by shielding their personal assets from risks. It also covers defense costs for lawsuits and investigations against directors and officers. Common use cases where D&O insurance provides protection include shareholder lawsuits, breach of fiduciary duty claims, and regulatory fines or penalties. The estimated annual premium for D&O insurance in the natural gas extraction industry ranges from $15,000 to $25,000 depending on factors like company size, revenue, and risk profile.

Category List
Benefits
  • Protection against legal costs and damages arising from civil claims or regulatory actions against directors and officers.
  • Defense costs to pay for lawyers and other experts during investigations or lawsuits against directors and officers.
  • Covers legal costs if a company has to indemnify directors and officers for covered losses.
  • Covers costs of appeals after a ruling or verdict against directors and officers.
  • Covers costs of pre-litigation crisis management services such as PR consultants or other professional advisors.
  • Prevents personal assets of directors and officers from being at risk if a company cannot indemnify losses.
Use Cases
  • Protection against shareholder lawsuits alleging mismanagement
  • Protection against claims of breach of fiduciary duty
  • Coverage for legal defense costs related to regulatory investigations and actions
  • Indemnification for civil or criminal fines and penalties deemed uninsurable by law
  • Protection in the event of bankruptcy or insolvency claims

Based on industry research and analysis, the average pricing for Directors And Officers Liability Insurance for businesses in the natural gas extraction industry with NAICS code 211130 is estimated to be between $15,000 to $25,000 annually. Pricing can vary depending on factors like the size of the company, annual revenue, number of locations/offices, claims history, and risk profile. Larger companies with higher annual revenue are likely to pay closer to $25,000 while smaller companies may pay closer to $15,000.

Estimated Pricing: $15,000 – $25,000 annually

Conclusion

Proper insurance planning is essential for natural gas extraction businesses to manage risks from their operations. The insurances outlined provide coverage for common issues faced in this industry from general liability claims to environmental damages. Having the right policies in place brings financial protection and peace of mind.

Frequently Asked Questions

Share via
Facebook
X (Twitter)
LinkedIn
Mix
Email
Print
Copy Link
Copy link
CopyCopied