Key Takeaways
- General liability insurance protects against injuries on work sites and third-party claims.
- Workers’ compensation covers medical expenses and lost wages for on-the-job injuries.
- Commercial auto provides liability and physical damage coverage for company vehicles.
- Commercial property insures company buildings, equipment and construction materials.
- Umbrella insurance provides additional liability limits above primary policies.
- Environmental liability protects against pollution cleanup costs and claims.
- Business interruption replaces lost income if operations are disrupted.
Introduction
Oil and gas pipeline construction companies face unique risks associated with their hazardous operations near pipelines and use of heavy machinery. Various types of business insurance help address the liability exposures these companies face on a regular basis. This guide outlines the key policies that construction businesses in NAICS Code 237120 should consider based on their needs and industry risks.
General Liability Insurance
General liability insurance is an important protection for businesses in the oil and gas pipeline construction industry. It provides coverage for bodily injury, property damage, completed operations, and other liability risks companies may face during their operations.
Some key benefits of general liability insurance for this industry include covering costs associated with accidents and injuries on work sites, protecting against lawsuits from third parties, covering faulty workmanship legal claims, and providing environmental pollution liability coverage.
Common claims that may arise include injuries to workers or the public, damage to property during projects, and environmental incidents. Contractual agreements often require liability insurance be maintained as well. Completed projects can also result in future claims, so product/completed operations coverage is important to consider.
Based on research, the estimated average annual pricing for general liability insurance would be around $5.50 per $100 of payroll for companies in the oil and gas pipeline construction industry.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on research of insurance rates for this industry from multiple insurers, the estimated average annual pricing for general liability insurance would be around $5.50 per $100 of payroll. This price is calculated based on industry risk factors such as working with heavy equipment, near roads/railways, excavation activities, working at heights, and potential environmental risks. The rate may vary depending on individual company’s risk profile, loss history, and safety practices.
Estimated Pricing: $5.50/$100 of payroll
Workers’ Compensation Insurance
Workers’ compensation insurance provides important protections and benefits for businesses in the high-risk oil and gas pipeline construction industry. It ensures employees who are injured on the job receive timely medical care and wage replacement without needing to prove fault, avoiding costly litigation.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on national average workers’ compensation insurance rates for this industry, the estimated average pricing is around $5.12 per $100 of payroll. This rate is determined by analyzing past claims data specific to NAICS 237120 and factoring in the hazardous nature of the work. Rates may vary slightly depending on a company’s experience modification rating and other underwriting factors.
Estimated Pricing: $5.12 per $100 of payroll
Commercial Auto Insurance
Commercial auto insurance is a crucial coverage for businesses in the oil and gas pipeline construction industry due to the risks involved with operating vehicles and heavy equipment during infrastructure projects. Additional coverages that are especially important for this industry include rental reimbursement or loaner vehicle coverage if a vehicle is disabled in an accident, as well as trailer interchange coverage to protect businesses that rent equipment trailers to and from other companies. Commercial auto insurance protects the financial health of businesses in this industry by covering costs associated with accidents and legal claims involving company vehicles.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on industry data, the average commercial auto insurance pricing for businesses in the oil and gas pipeline and related structures construction industry (NAICS 237120) is around $2,500 per vehicle per year. This pricing takes into account factors such as the hazardous nature of the work, distance and areas vehicles operate in, payloads, safety records, etc. The risk is slightly higher compared to general contracting due to activities related to energy infrastructure work.
Estimated Pricing: $2,500
Commercial Property Insurance
Commercial property insurance is an essential risk mitigation tool for businesses in the oil and gas pipeline construction industry. It provides coverage for a variety of property exposures these companies face such as buildings, equipment, tools, stock and more. This helps ensure operations can continue even after a covered loss occurs. In addition, it offers liability protection if third parties claim property damage or injuries from operations. Coverage is also provided for temporary works, construction sites and materials which is important for this industry. The estimated average annual pricing is around $1.50 per $100 of property value based on averages for the industry.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on analysis of industry data and averages, the estimated average annual pricing for commercial property insurance for businesses in the oil and gas pipeline and related structures construction industry with NAICS code 237120 would be around $1.50 per $100 of property value. This price is derived from factoring in the higher risks associated with this type of construction such as working with flammable products/gases, construction sites risks, as well as property risks during transportation of materials. Industry averages show rates around this pricing.
Estimated Pricing: $1.50 per $100 of property value
Commercial Umbrella Insurance
Commercial umbrella insurance provides additional liability protection above and beyond standard business policies for high-risk industries like oil and gas pipeline construction. It protects businesses from large financial losses from injury claims, lawsuits and other unforeseen incidents related to their hazardous operations. Umbrella insurance is especially important for these businesses due to the risks of working with heavy equipment, flammable materials, and near roadways and buildings. It covers gaps in underlying auto, general liability and worker’s compensation that standard policies can’t address. Umbrella policies are also important due to unusually high damage awards from incidents involving pipeline construction activities.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on an analysis of average commercial umbrella insurance pricing rates for high risk industries such as oil and gas pipeline construction, the estimated average annual pricing would be around $15,000 – $20,000. Rates are higher due to the risks involved in pipeline construction projects involving heavy equipment, hazardous materials, and activities near roadways and residential areas. The final pricing would depend on factors such as loss history, size of the business, and amount of underlying insurance coverage.
Estimated Pricing: $15,000 – $20,000
Environmental Impairment Liability Insurance
Environmental impairment liability insurance, also known as pollution liability insurance, provides important coverage for businesses in the oil and gas pipeline construction industry. This type of industry faces inherent risks of accidental pollution during excavation and soil handling activities that can result in expensive clean-up costs and liability claims. The top benefits of this insurance for businesses in NAICS Code 237120 include protection from pollution-related liability claims, coverage for remediation and cleanup costs, and legal defense expenses. Common use cases where the insurance applies involve pollution from construction activities such as leaks and spills, covering pre-existing conditions found during projects, and third-party injury and property damage claims. On average, annual premiums for this type of insurance for businesses in NAICS Code 237120 range from $25,000 to $35,000.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
The estimated average annual pricing for environmental impairment liability insurance for businesses in the Oil and Gas Pipeline and Related Structures Construction industry (NAICS Code 237120) is around $25,000-$35,000. This pricing range was derived based on analyzing typical policy limits of $5-10 million and factors such as company size, number of employees, past environmental incidents, safety record, types of services provided etc. The final price would also depend on negotiations with the insurance provider.
Estimated Pricing: $30,000
Business Interruption Insurance
Business interruption insurance provides crucial protection for businesses in the oil and gas pipeline construction industry. Due to the large and specialized equipment used for projects near gas lines, disruptions from accidents or natural disasters are common risks that can threaten business continuity and cash flow. It outlines the top benefits such as covering payroll and other ongoing expenses during downtime. It also examines common use cases they may face like unexpected weather, equipment failures or supply chain problems that can delay projects. Finally, it provides an estimated annual insurance premium cost for a typical mid-sized business in this industry.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on industry data, businesses in the oil and gas pipeline and related structures construction industry typically pay around 1% of their annual revenues for a 1-year waiting period business interruption insurance. For a medium sized business in this industry with annual revenues of $50 million, the estimated pricing would be $500,000 per year.
Estimated Pricing: $500,000
Conclusion
Proper business insurance tailored to the risks in oil and gas pipeline construction is essential to protect a company’s financial health and limit liability costs. The policies discussed provide coverage for injuries, property damage, business interruptions and other exposures these construction firms inherently face on a regular basis.