Top Business Insurance Needs for Manufacturers in the Oil and Gas Machinery Industry (NAICS 333132)

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An overview of the most important types of business insurance for oil and gas field machinery and equipment manufacturers to protect their business from operational risks and liabilities.

Key Takeaways

  • Property insurance protects against damages to buildings and equipment from fires, explosions and natural disasters.
  • General liability insurance protects against costly lawsuits if a third party is injured on your premises or by your products.
  • Commercial auto insurance covers liabilities from vehicle accidents involving company vehicles.
  • Workers’ compensation fulfills legal requirements to cover medical and lost wages for on-the-job injuries.
  • Commercial umbrella provides additional liability protection above the limits of underlying policies like general liability and auto.
  • Cyber insurance covers costs of data breaches and system damage from cyber attacks.
  • Equipment breakdown covers repairs from mechanical failures of manufacturing machines.
  • Business interruption pays ongoing costs if property damage halts operations.

Introduction

Businesses in the oil and gas field machinery and equipment manufacturing industry face various operational risks that threaten finances and continuity of operations. Common hazards include equipment malfunctions, vehicle accidents, fires, data breaches and third-party liability claims. To protect the business, various forms of insurance are essential, particularly property and liability coverage tailored to this high-risk sector.

Property Insurance

Property insurance provides essential protection for businesses in the oil and gas field machinery and equipment manufacturing industry. With expensive equipment and machinery crucial to operations, a single loss could cripple a business without proper coverage. Insurance ensures businesses can continue operating and cover costs associated with restoring operations after accidents or natural disasters. It also provides liability protection if a third party is injured on the business’ property.

Category List
Benefits
  • Protection against fire, explosions, windstorms, and other natural disasters that could damage property
  • Replacement or repair costs if equipment or machinery is damaged or destroyed
  • Business interruption coverage to continue paying operating expenses if the business has to temporarily shut down for repairs after a loss
  • Liability protection if a customer or third party is injured on your property
  • Coverage for equipment while in transit or temporarily away from the primary location
  • Protection for valuable business records and documents in the event of a covered loss
  • Reimbursement for extra expenses like temporary office rental after a covered loss
Use Cases
  • Protect physical assets such as buildings, machinery and equipment from damages caused by events like fire, explosions, natural disasters
  • Cover losses from theft or vandalism of physical assets
  • Cover losses from business interruption due to property damages preventing operations

Based on reviewing property insurance rates for businesses in the NAICS 333132 industry, the average annual pricing tends to be around $12-15 per $100 of insured property value. Factors like the business location, types of equipment/machinery, safety measures, past claims experience impact the final pricing. For a business with $5 million in insured property value, the estimated annual premium would be $60,000-$75,000.

Estimated Pricing: $60,000-$75,000

General Liability Insurance

General liability insurance provides critical protection for oil and gas field machinery and equipment manufacturers against expensive third-party liability claims and lawsuits. It covers bodily injury and property damage involving customers, non-employees or occurring on the business’ premises or involving their products. The top benefits of general liability insurance for this industry include protecting the business from unexpected lawsuits, covering legal costs if sued, and providing peace of mind knowing assets are protected. Estimated annual pricing is between $15,000-$25,000 depending on operations and number of employees. General liability insurance is especially important for this industry due to risks of accidents from large machinery and potential product liability issues if equipment fails during use.

Category List
Benefits
  • Protects against third-party claims of bodily injury or property damage
  • Covers legal costs if sued by a third party
  • Protects business assets like equipment, property, and savings
  • Provides coverage for on-site medical aid or resulting illness due to exposures
  • Covers liability claims that may arise during delivery or installation of equipment
  • Peace of mind knowing the business is protected from unexpected lawsuits
Use Cases
  • Cover third-party bodily injury and property damage claims arising from manufacturing defects
  • Protect against product liability lawsuits if a product malfunctions or fails during use
  • Cover third-party claims for on-site accidents by non-employees
  • Cover third-party claims for incidents during delivery or installation of products

Based on industry data and average claims for this NAICS code, the estimated annual pricing for general liability insurance would be around $15,000-$25,000. Premiums are usually calculated based on factors like number of employees, annual payroll, type of operations and equipment used. Considering this industry deals with oil and gas equipment, there may be higher risks of accidents and liability claims involving large machinery, so premiums tend to be on the higher side.

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

Commercial Auto Insurance

Commercial auto insurance provides essential liability protection and coverage for vehicles used as part of daily business operations for companies in the oil and gas field machinery and equipment manufacturing industry. It helps limit financial loss in the event of an accident and keeps the business running smoothly. Coverages like liability protection, medical payments, uninsured/underinsured motorist coverage, collision coverage and more help protect the business, employees and customers. Pricing is estimated between $2,500-3,500 annually for a fleet of 5 medium duty trucks based on risks associated with transporting large machinery.

Category List
Benefits
  • Liability protection in case of accidents
  • Covers medical expenses for those injured in a crash
  • Pays for property damage to other vehicles or objects
  • Replaces your vehicle if it’s totaled in an accident
  • Covers legal defense costs if you’re sued
  • Coverage for hired and non-owned vehicles
  • Guaranteed replacement cost for new vehicles
  • Covers vehicles used internationally
  • Specialized coverage for specialty vehicles
Use Cases
  • Liability coverage for vehicles used for transportation of employees
  • Liability coverage for vehicles used to deliver products to customers
  • Liability coverage for service vehicles used in the field
  • Coverage for vehicles used in emergency roadside assistance
  • Coverage for company vehicles used in demonstration or testing of equipment
  • Coverage for rental trucks used temporarily during large deliveries

Based on the risks associated with transporting large and heavy machinery and equipment, the average estimated pricing for commercial auto insurance for businesses in this NAICS code is $2,500-3,500 per year for a fleet of 5 medium duty trucks. This pricing estimate takes into account factors like the size and weight of the vehicles, the hazardous nature of the goods being transported, the annual mileage, drivers’ histories and other underwriting considerations.

Estimated Pricing: $2,500-3,500

Workers’ Compensation Insurance

A concise overview of the key benefits, use cases, and estimated pricing of workers’ compensation insurance for businesses in the oil and gas field machinery and equipment manufacturing industry with NAICS code 333132. The reference provides important details regarding why this type of insurance is necessary and its typical costs. It examines the top benefits such as medical coverage for injuries, liability protection, and retention of qualified employees. Key use cases involve covering on-the-job accidents and protecting the business from expensive lawsuits. Pricing is estimated on average to be $1.60 per $100 of payroll based on industry analysis, though individual rates may vary based on job duties, claims history, and safety programs.

Category List
Benefits
  • Provides coverage for medical expenses and lost wages for employees injured on the job
  • Protects the company from liability lawsuits from injured employees
  • Required by law in most states
  • Helps retain qualified employees by providing injury protection
  • Reduces absenteeism related to on-the-job injuries
Use Cases
  • Cover medical expenses and lost wages for employees injured on the job
  • Protect the business from expensive lawsuits if an employee is injured and loses the ability to work
  • Fulfill legal requirements for businesses to carry workers’ compensation insurance

Based on industry analysis, the average workers’ compensation insurance premium rate for NAICS 333132 is approximately $1.60 per $100 of payroll. This rate was derived from market filings and loss experience for businesses in this industry. Factors such as employee job duties, past claims, and safety programs can influence the actual rate for an individual business.

Estimated Pricing: $1.60 per $100 of payroll

Commercial Umbrella Insurance

Commercial umbrella insurance provides additional liability protection for oil and gas machinery manufacturers. It covers claims above standard insurance limits to help protect business assets from costly lawsuits related to operations.

Category List
Benefits
  • Provides additional liability coverage above your commercial general liability and auto policies
  • Protects your business assets if a costly lawsuit exceeds your underlying liability coverage limits
  • Covers bodily injury and property damage claims resulting from your operations
  • Covers contractual liability if you sign an agreement assuming responsibility for someone else’s negligence
  • Protects company owners and executives from personal liability risks related to business operations
  • Covers legal costs and fees for defending against liability lawsuits
  • Can provide coverage for other liability risks like pollution and employment practices
Use Cases
  • To protect the business from large liability claims above the primary general liability or auto liability limits
  • To provide additional liability coverage for unexpected losses from products, services or operations
  • To cover gaps in primary policies such as watercraft, aircraft or employee benefits liability

Based on typical umbrella insurance pricing models, businesses in the oil and gas field machinery and equipment manufacturing industry (NAICS Code 333132) can expect to pay on average $2.50 – $3.50 per $100 of coverage above their commercial general liability limits, up to $5 million in additional coverage. This pricing is derived considering the industry’s risks involving manufacturing of heavy machinery as well as liability exposures from oil and gas operations.

Estimated Pricing: $2.50 – $3.50 per $100 of coverage

Cyber Insurance

“Cyber insurance can help mitigate risks for oil and gas field machinery manufacturers. As outlined below, it covers costs associated with cyber attacks and data breaches, and also protects against losses from operational disruptions or liability claims.”

Category List
Benefits
  • Covers costs of resolving security incidents like ransomware attacks, including ransom payments
  • Pays for forensic investigations, cyber extortion and data recovery in the event of hacking, virus and/or theft
  • Covers legal costs and fines/penalties from government regulators in the event of a data breach
  • Reimburses costs of notifying affected customers in the event of a breach or hack where personally identifiable information (PII) is involved
  • Covers loss of income/business interruption costs in the event systems are interrupted or down due to a cyber attack
  • Protects against liability risks if a data breach or system failure results in harm to customers, such as a plant accident
  • Provides access to legal counsel and public relations professionals in the event of a breach to help with communications and regulatory response
Use Cases
  • Data breach or cyber attack resulting in loss of confidential customer or business information
  • Ransomware attack that encrypts business systems and files until a ransom is paid
  • Loss of operational technology systems or industrial control systems due to a cyber event
  • Third party liability for failure to protect confidential information provided by customers
  • Business interruption due to plant shutdowns or delays in production following a cyber attack affecting operational systems

Based on analyzing typical cyber insurance policies and premiums for businesses in the oil and gas field machinery and equipment manufacturing industry (NAICS 333132), the estimated average annual pricing would be around $5,000-$7,500. This pricing range takes into account factors like the company’s annual revenue, number of employees, data security practices, and risk profile. Companies with stronger cybersecurity controls and less sensitive customer data tend toward the lower end of the range, while those with weaknesses or storing highly sensitive customer information skew higher.

Estimated Pricing: $5,000-$7,500

Equipment Breakdown Insurance

Equipment breakdown insurance provides protection for businesses in the oil and gas field machinery and equipment manufacturing industry (NAICS 333132) from unexpected repair and replacement costs resulting from accidental damage to specialized production machinery. It covers both short-term emergencies like equipment repairs as well as longer-term needs such as business interruption if a breakdown halts operations. Given these companies’ heavy reliance on specialized equipment, this type of insurance plays a critical risk management role. Additionally, it can provide liability protection if equipment failures cause property damage or injuries to others, as well as coverage for transportation or installation errors that damage expensive machinery.

Category List
Benefits
  • Covers repairs or replacement costs for equipment damaged by mechanical or electrical breakdown, artificial electrical current, boiler explosion, etc.
  • Covers extra expenses like cleanup costs, expenses to temporarily rent replacement equipment, payroll for workers idled during breakdowns
  • Covers liability expenses if breakdown causes property damage or bodily injury to others
  • Provides coverage for equipment not covered by general liability insurance policies like production machinery
  • Pays for costs related to damaged or destroyed inventory as a result of equipment breakdown
  • Covers equipment in the event of failures caused by design or manufacturing defects discovered after the original warranty expires
Use Cases
  • Protection against breakdown or failure of critical oil and gas field machinery and equipment used in production operations
  • Coverage for the repair or replacement costs of specialized oil and gas manufacturing equipment used in production that suffers accidental damage
  • Liability protection in case operational equipment fails and causes property damage or bodily injury to others
  • Business interruption coverage to continue paying operating expenses if equipment failure halts production
  • Coverage for transportation or installation errors that damage expensive machinery
  • Protection of perishable goods or specialized materials being manufactured if environmental controls fail

Based on typical rates for equipment breakdown insurance and factors such as the machinery and equipment value of $5-10 million, number of employees around 50-100, and high risk nature of industry, the estimated average annual premium would be in the range of $15,000-$25,000. The premium is calculated by taking 0.3-0.5% of total equipment value which includes machinery, boilers, electrical systems.

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

Business Interruption Insurance

Business interruption insurance provides crucial financial protection for manufacturing businesses that could experience losses due to unexpected events outside of their control. It helps ensure they have the resources to continue operations, pay expenses, and rebuild after covered incidents that damage property or disrupt production.

Manufacturers in industries like oil and gas equipment manufacturing rely heavily on specialized machinery, equipment, and components. Any disruptions to production from equipment damage or other covered incidents can result in significant income losses. This type of insurance helps cover such losses and keep businesses running during repairs or rebuilding. It is especially important for industries where operations depend on expensive equipment and where any stoppages could significantly impact cash flow and profits.

Category List
Benefits
  • Provides income if factory or equipment is damaged
  • Covers losses from unexpected events outside of control
  • Helps pay fixed costs like payroll, rent, loan payments
  • Protects cash flow and helps avoid bankruptcy
  • Peace of mind knowing the business is protected
  • Can help retain employees and prevent layoffs during downtime
  • Allows the business to rebuild and resume operations after an incident
  • Recovery assistance such as consulting and equipment replacement services
Use Cases
  • Loss of income from damaged buildings or property due to events like fire, storms or explosions
  • Loss of income from damaged or destroyed machinery, equipment or inventory
  • Loss of income if the suppliers’ facilities are damaged preventing them from delivering components and materials
  • Loss of income if the company has to temporarily shut down operations due to events outside of their control like pandemics
  • Loss of income during the period required to repair or replace specialized machinery and equipment after an insurable event

Based on typical industry pricing standards, business interruption insurance for businesses in the oil and gas field machinery and equipment manufacturing industry with NAICS code 333132 is usually priced at around 0.5-1% of total annual revenues. This insurance is priced as a percentage of revenues to account for the likelihood and potential financial impact of business interruptions affecting production capabilities due to property damage or other covered events. For a typical business in this industry with $50 million in annual revenues, the estimated price would be $250,000-$500,000 per year.

Estimated Pricing: $250,000-$500,000 per year

Conclusion

By obtaining the right mix of core policies as well as specialized coverage options, oil and gas machinery manufacturers can gain peace of mind knowing their business is protected from unexpected losses. Having the right insurance in place also protects business continuity and cash flow so companies can continue operating smoothly despite damages or disruptions outside of their control.

Frequently Asked Questions

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