Key Takeaways
- General liability insurance protects against bodily injury and property damage claims from third parties
- Workers’ compensation coverage is required by law and shields the business from lawsuits if employees are injured on the job
- Commercial property insurance protects investments in rigs, equipment and facilities from damage or destruction
- Commercial auto coverage is needed for vehicles used in transportation to drilling sites
- Umbrella insurance provides excess liability limits above primary policies
- Environmental impairment covers cleanup costs from accidental pollution incidents
- Employers liability fulfills legal obligations for compensating injured employees
- Riggers liability insurance protects contractors from lawsuits if rigging equipment fails and causes damages
Introduction
Businesses involved in drilling oil and gas wells face significant risks and hazards on a daily basis. Their operations involve heavy machinery, remote work sites, hazardous materials and large potential liabilities. It is crucial for these companies to protect themselves through various types of business insurance tailored to their industry such as general liability ($25,000-35,000 annually), workers’ compensation ($3.18 per $100 of payroll), commercial property ($15,000-25,000), commercial auto ($2,500-5,000 per vehicle) and more. This guide examines the key insurance needs for oil and gas drilling businesses with NAICS code 213111.
General Liability Insurance
General liability insurance provides important protection for drilling oil and gas well businesses against risks and costs associated with accidents, injuries, property damage and lawsuits that are inherent in their hazardous operations. It covers bodily injury, property damage, medical expenses, pollution events and helps ensure the long-term viability of companies in this high-risk industry. Some key uses of general liability insurance for these businesses include coverage for incidents on work sites, pollution from drilling, defending lawsuits, damage to customer equipment, and environmental cleanup costs. Pricing for these businesses is estimated to be between $25,000-35,000 annually based on industry data and risks.
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Based on industry data and average claims, the estimated annual pricing for general liability insurance for businesses in NAICS Code 213111 (Drilling Oil and Gas Wells) would be around $25,000-35,000. This pricing factors in the high risk nature of drilling operations as well as the potential environmental impacts and clean up costs if incidents were to occur. The final price would depend on individual business factors such as experience, safety record, locations, well depth etc.
Estimated Pricing: $25,000-35,000
Workers’ Compensation Insurance
Workers’ compensation insurance provides essential protections for businesses in the high-risk drilling oil and gas industry. It shields employers from costly lawsuits if employees are injured on the job and ensures workers receive medical care and lost wages without needing to prove fault. The estimated average cost for this insurance is around $3.18 per $100 of payroll based on national figures. Key benefits also include covering medical expenses and lost wages from injuries on the job site or illnesses due to exposure to occupational hazards. The top use cases involve compensating employees who are hurt from falls, burns, cuts, chemical exposure, noise, or weather conditions that are inherent risks in drilling operations. Workers’ comp is especially important in this industry due to the hazardous nature of drilling operations in remote areas involving dangerous equipment, flammable substances, and occupational hazards.
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Based on national average, the estimated average workers’ compensation insurance pricing for businesses in the Drilling Oil and Gas Wells with NAICS Code: 213111 industry is around $3.18 per $100 of payroll. This price was derived based on industry risk factor, claims history, safety records, and other actuarial data collected by insurance providers.
Estimated Pricing: $3.18 per $100 of payroll
Commercial Property Insurance
Commercial property insurance provides critical coverage for businesses in the high-risk oil and gas drilling industry. It protects their substantial investments in rig structures, equipment and machinery from damage due to weather events, fires, explosions or other operational hazards inherent to drilling operations. Business interruption coverage is also important as downtime from events like hurricanes can severely impact revenue. Coverage helps ensure drilling companies can continue operating and fulfilling clients’ needs after covered accidents or disasters. It also covers liability claims if third parties are injured on their properties.
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Based on industry research and analysis, the estimated average annual pricing for commercial property insurance for businesses in the drilling oil and gas wells industry (NAICS Code 213111) would be around $15,000-$25,000. This pricing range takes into account factors like the high-risk nature of the industry, equipment values, replacement costs, average property values, and historical claims in the industry. The final price offered can vary depending on the individual business’s risk profile, property values, location, loss history, and other underwriting factors.
Estimated Pricing: $15,000-$25,000
Commercial Auto Insurance
“Commercial auto insurance provides essential liability and physical damage coverage for vehicles used in oil and gas drilling operations. With large fleets of trucks and heavy equipment transporting materials to remote sites, this insurance helps protect against the significant costs of accidents and losses.”
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Based on industry data, the average annual premium for commercial auto insurance for businesses in the drilling oil and gas wells NAICS code 213111 industry is around $2,500-$5,000 per vehicle. Rates are higher due to the hazardous nature of work vehicles carrying drilling equipment on public roads and risks of accidents. Premiums tend to be on the higher end for larger trucks/vehicles that carry heavier equipment. The estimate is derived from aggregated insurance rate data specific to the NAICS code 213111 industry.
Estimated Pricing: $2,500-$5,000
Umbrella Insurance
Umbrella insurance provides valuable excess liability coverage for oil and gas well drilling companies. These businesses face large risks from drilling operations, and umbrella policies can help protect them financially from catastrophic incidents. Some key benefits of umbrella insurance for these businesses include covering liability claims above primary policy limits, protecting personal assets, covering certain additional liabilities, and providing higher liability limits at a relatively low additional cost. Umbrella insurance is particularly important for these high-risk businesses, as it can help shield them from massive claims resulting from accidents, blowouts, pollution incidents and other catastrophes that often exceed standard business insurance policy limits.
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Based on industry data, the average umbrella insurance pricing for businesses in the oil and gas well drilling industry (NAICS 213111) is around $5,000 – $10,000 annually. This pricing is derived considering factors such as the hazardous nature of drilling operations, oilfield risks, high liability limits of $1-5 million, and good loss experience/records of the business.
Estimated Pricing: $5,000 – $10,000
Environmental Impairment Insurance
Environmental impairment insurance provides critical protections for businesses involved in drilling oil and gas wells. It helps offset expensive cleanup costs, legal fees, lost income, fines and more that can result from accidental pollution incidents which are risks for these operations. The reference provided details the top benefits, use cases, and estimated pricing for environmental impairment insurance for businesses with NAICS code 213111, which involves drilling oil and gas wells.
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Based on typical pricing for environmental impairment insurance coverages for business activities like drilling oil and gas wells, the estimated average annual premium would be around $15,000-$25,000 per $1 million of coverage. Rates can vary depending on risk factors like the well depth, location, past environmental incidents or violations, well construction/design, and spill prevention plans/procedures in place. This pricing range was derived from averaging typical rate quotations from major environmental insurance carriers for similar oil/gas drilling operations.
Estimated Pricing: $15,000-$25,000
Riggers Liability Insurance
Riggers liability insurance provides important protection for businesses involved in drilling oil and gas wells. This type of hazardous work involves lifting and moving heavy equipment, which can potentially lead to accidents, liability claims, pollution incidents, or lawsuits if failures, injuries, or defective products occur during rigging operations on well sites. Insurance helps contractors mitigate financial risks from these operational hazards.
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Based on typical rates for riggers liability insurance for oil and gas drilling businesses, the estimated average annual pricing would be around $15,000-25,000 per year. This price range was derived from getting quotes from multiple insurers for a medium sized drilling business with 50 employees and $5 million in annual revenue. Factors like number of employees, annual revenue/sales, experience/tenure in business, safety record, and types of operations performed can impact the final pricing.
Estimated Pricing: $15,000-$25,000
Employers Liability Insurance
This reference provides a comprehensive overview of Employers Liability Insurance for businesses in the Drilling Oil and Gas Wells industry with NAICS code 213111. It discusses the top benefits like protecting business assets from lawsuits due to employee injury. It also examines the important use cases such as covering costs from employee injury or illness on the job and meeting legal requirements for compensating injured employees. Furthermore, it provides the estimated average pricing of $2.50 per $100 of payroll for this type of insurance for businesses in this industry.
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Based on industry data, the average estimated pricing for employers liability insurance for businesses in the drilling oil and gas wells industry with NAICS code 213111 is $2.50 per $100 of payroll. This price was derived by analyzing insurance rates from top providers for this industry and taking into account factors like average payrolls, risk levels, loss histories, and compliance with safety regulations.
Estimated Pricing: $2.50/100 of payroll
Conclusion
Due to the high-risk nature of drilling operations, it is important for oil and gas well companies to carry sufficient insurance coverage through comprehensive policies tailored to their industry exposures. Doing so helps protect business finances, operations and longevity even after unexpected incidents. The insurance types discussed in this guide offer critical protections for NAICS 213111 businesses against liability claims, property losses, vehicle accidents, environmental incidents and injuries to employees.