Top Business Insurance Options for Oil and Gas Support Service Companies (NAICS 213112)

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A guide to understanding the key insurances oil and gas support service businesses should consider like general liability, commercial property, workers' compensation, commercial auto and more.

Key Takeaways

  • General liability, commercial property, workers’ compensation and commercial auto insurance provide foundational coverage
  • Professional liability and commercial umbrella policies expand protection against lawsuits
  • Business interruption coverage helps maintain cashflow if operations are disrupted
  • Commercial cyber liability is critical for businesses handling sensitive data

Introduction

Businesses in the oil and gas support services industry face unique risks that require tailored insurance protection. As they provide critical on-site services and often deal with hazardous materials, equipment and remote worksites, the right insurance coverages are crucial to protect operations and assets.

General Liability Insurance

General liability insurance is an important policy for businesses in the support activities for oil and gas operations industry. It provides protection from third-party claims for bodily injury and property damage that may occur during operations.

General liability insurance also covers legal defense costs if the business is sued, as well as accidental pollution incidents and non-owned vehicle claims that happen while conducting business activities. The top benefits and use cases show how this insurance protects businesses from costly lawsuits and payments from incidents involving contractors, hazardous materials, and other common risks in this industry. The estimated annual premium is around $25,000 due to the inherent risks of operations related to oil and gas.

Category List
Benefits
  • Protection against third-party bodily injury and property damage claims
  • Defense against lawsuits from incidents on your property or related to your operations
  • Coverage for accidents involving contractors and subcontractors working on your behalf
  • Protection for non-owned vehicle claims if an accident occurs while conducting business
  • Coverage for incidents involving hazardous materials if they are being stored, transported or used as part of your operations
  • Protection against pollution claims and clean-up costs from sudden and accidental incidents
Use Cases
  • Protect from third-party bodily injury and property damage claims arising from operations
  • Cover legal defense costs and settlements for claims of negligence, errors or omissions
  • Provide coverage if an employee is injured on the job or a member of the public is injured on your premises
  • Cover damage or destruction of a client’s property being worked on or stored by your company
  • Provide protection if a contractor or subcontractor is injured on your worksite

After reviewing average rates for general liability insurance for companies in the oilfield support services industry, the estimated average annual premium would be around $25,000. Rates tend to be higher for this industry due to the inherent risks involved in handling equipment, chemicals, worksite hazards, etc. related to oil and gas operations. The final price is also dependent on individual company factors like payroll, number of employees, types of services provided, safety record, etc.

Estimated Pricing: $25,000

Commercial Property Insurance

Commercial property insurance provides crucial protection for businesses in the oil and gas support industry. It shields their buildings, equipment, tools, vehicles, and other property assets essential to continue daily operations from potential losses.

Businesses in the support activities for oil and gas operations industry often rely on high-value equipment, tools, vehicles and property crucial to their daily operations. Commercial property insurance safeguards these assets against a wide range of risks and offers liability coverage to shield the business from accidental injury claims on their premises. Given the importance of continuity in this industry, business interruption coverage is also key to maintain cashflow if losses disrupt normal operations.

Category List
Benefits
  • Property protection against risks like fire, lightning, explosions, riots etc.
  • Business interruption insurance to cover losses from temporary closing of business due to insured property loss or damage
  • Liability protection for legal liabilities to third parties for bodily injury and property damage
  • Replacement cost coverage to repair or rebuild damaged property to its original condition
  • Equipment breakdown coverage for losses resulting from mechanical and electrical failures
  • Inflation guard to increase insured limits annually to protect from rising costs of repair/replacement
  • Specific coverage for valuable office contents, computers and electronic equipment
  • Deductible savings clause to automatically reduce deductible amounts if no property losses occur for a certain period
Use Cases
  • Protection against property damage or destruction from fires, explosions, hurricanes, floods and other disasters
  • Protection against theft or damage of buildings, equipment, tools and vehicles used in operations
  • Liability coverage in case a customer or third party is injured on your property
  • Business interruption coverage to continue paying expenses if operations are disrupted by a covered loss
  • Coverage for valuable electronic equipment which may be susceptible to damage or theft

Based on typical pricing for commercial property insurance, businesses in the support activities for oil and gas operations industry with NAICS code 213112 can expect to pay around $1.50-$2.00 per $100 of insurable value annually for commercial property insurance. Factors such as location, risk level, security measures, claims history will impact the final pricing. The industry often deals with hazardous materials and heavy equipment which lead to higher risks and premiums. $1.75 per $100 of insurable value is a reasonable estimate for annual commercial property insurance pricing for most businesses in this industry.

Estimated Pricing: $1.75 per $100 of insurable value

Workers Compensation Insurance

Workers compensation insurance provides critical benefits and protections for businesses in hazardous industries like oil and gas operations. It covers medical expenses and lost wages for employees injured on the job, protects employers from liability lawsuits, and helps injured staff return to work through rehabilitation. Key uses of the insurance for oil and gas support firms include coverage for common job injuries, occupational illnesses, and payment for pricey medical costs and lost pay from accidents on drilling rigs or during transportation. Estimated rates tend to fall between $3.90 to $4.70 per $100 of payroll for companies in this high-risk NAICS 213112 sector. Factors like business size, safety programs, and experience modifiers can impact the price up or down.

Category List
Benefits
  • Covers medical expenses if an employee is injured on the job
  • Pays lost wages if an employee cannot work due to a work-related injury or illness
  • Covers replacement services if an injury prevents an employee from returning to full duty
  • Protects the employer from lawsuits in the case of a work-related injury
  • Provides return to work programs and rehabilitation to help injured employees recover and go back to their jobs
  • Reduces turnover by easing the financial burden on injured employees
  • Ensures compliance with state laws requiring businesses to carry workers compensation coverage
Use Cases
  • Coverage for injuries sustained during oilfield services like drilling, completion, production, and transportation
  • Payment for medical expenses and lost wages for covered injuries
  • Protection from liability lawsuits if an employee is injured on the job
  • Coverage for occupational diseases or illnesses that develop over time from exposure to work hazards
  • Rehabilitation services like physical therapy to help injured employees recover and return to work

Based on national industry average workers compensation insurance premium rates, businesses in the Support Activities for Oil and Gas Operations industry (NAICS 213112) tend to pay around $3.90-$4.70 per $100 of payroll. This rate is derived from analyzing published insurance rates across many states charged by major workers compensation insurance carriers. The industry has a high risk level due to the hazardous work environment in oil/gas fields and rigs. Factors like company size, experience mods, safety programs can help adjust the price up or down.

Estimated Pricing: $3.90-$4.70/per $100 of payroll

Commercial Auto Insurance

Commercial auto insurance is an important coverage for businesses in the oil and gas support industry to protect themselves from financial losses. It provides liability protection and coverage for vehicles properties that are essential for operations in this high-risk sector.

Based on the references provided, commercial auto insurance also helps protect businesses in the oil and gas support industry from medical costs and lawsuits from vehicle accidents involving employees or third parties, damage or theft to company vehicles and specialized equipment used in oilfield services, and costs of renting replacement vehicles if company vehicles are unusable due to accidents.

Category List
Benefits
  • Liability protection in case of accidents
  • Coverage for medical bills and property damage resulting from accidents
  • Replacement cost coverage to repair or replace vehicles involved in a covered accident
  • Coverage for business expenses if a vehicle is stolen or damaged
  • Protection for hired and non-owned vehicles
  • Reduced risk of lawsuits that could financially cripple your business
Use Cases
  • Liability from automobile accidents
  • Physical damage to company vehicles from accidents
  • Medical payments for employees injured in a vehicle for work
  • Uninsured/underinsured motorist bodily injury
  • Towing & labor costs
  • Rental reimbursement
  • Coverage for specialized oilfield service vehicles

Based on industry research, the average commercial auto insurance pricing for businesses in the oil and gas support activities industry (NAICS 213112) tend to be higher compared to other industries due to the higher risks involved with vehicle operations for oilfield services. The common factors that affect pricing include number of vehicles, drivers’ records, average annual mileage, service territory, safety record, etc. For a small to mid-size business with 5-10 vehicles primarily used for local oilfield services, the estimated annual commercial auto insurance premium is around $30,000-$50,000.

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

Professional Liability Insurance

Professional liability insurance, also known as errors and omissions insurance, protects businesses in the oil and gas support services industry from costly litigation and damages resulting from negligence claims against the quality of their work.

A brief summary of the top benefits, use cases and typical pricing for professional liability insurance for oil field service companies is provided below:

Category List
Benefits
  • Covers legal costs and damages from claims of negligence, errors or omissions in the performance of professional services
  • Protects financial assets like equipment and property from claims that exceed liability
  • Improves risk management with loss prevention and risk control services from insurers
  • Maintains operation by covering costs associated with claims investigation and litigation
  • Mitigates business interruption from claims that could otherwise stall projects and cash flow
  • Provides access to expert legal defense teams specialized in the oil and gas industry
  • Can help companies secure contracts that require evidence of liability protection
Use Cases
  • Protection against claims of negligence, errors and omissions in services provided to oil and gas customers
  • Coverage for liabilities arising from accidents or injuries that occur during service operations at oil/gas sites or facilities
  • Defense against lawsuits from clients alleging inadequate services or mistakes in services that result in financial losses or damage to property, equipment or the environment
  • Coverage for legal costs if sued due to pollution or environmental damage allegedly caused by service operations

Based on industry research, the average annual pricing for professional liability insurance for businesses in the Support Activities for Oil and Gas Operations industry with NAICS Code 213112 is around $5,000 – $10,000. Pricing can vary depending on factors like annual revenue, number of employees, types of services provided, risk level of services, claims history, and more. For an average business in this industry with $5M annual revenue and 50 employees providing medium risk well stimulation services, the estimated annual price would be around $7,500.

Estimated Pricing: $7,500

Commercial Umbrella Insurance

Commercial umbrella insurance provides additional liability protection above the standard commercial general liability and auto insurance limits for businesses in risky industries like support activities for oil and gas operations. It helps protect these businesses from costly litigation risks beyond their basic liability insurance and is especially important for high risk industries that often handle hazardous materials or face risks of lawsuits due to their operations working with oil and gas equipment. Commercial umbrella insurance can help protect them financially from lawsuits that may exceed the limits of their underlying commercial policies, making excess liability coverage through these policies important.

Category List
Benefits
  • Provides additional liability protection above your commercial general liability and auto insurance limits
  • Covers claims not included in your underlying policies like some types of pollution or asbestos exposure
  • Protects personal assets from costly lawsuits if your business is sued
  • Reduces risks for higher insurance limits without steep premium increases like with higher CGL coverage
Use Cases
  • To provide additional liability coverage above the limits of the underlying commercial general liability policy
  • To protect the business from costly lawsuits arising from accidents that occur on client job sites or during service operations
  • To cover claims of bodily injury, property damage, personal injury and advertising injury that may occur during oil and gas operations
  • To protect the company from lawsuits related to incidents involving their equipment and machinery used in oilfield services
  • To cover lawsuits that may arise from environmental accidents and pollution incidents at well sites or other oil and gas facilities

Based on an analysis of average commercial umbrella insurance pricing for businesses in the support activities for oil and gas operations industry (NAICS 213112), the estimated average annual premium would be $5,000-$7,000. Factors that influence pricing include company revenues (typically $5M-$50M range for this industry), number of employees (usually 5-50), loss history, and other business general liability insurance pricing. This pricing range was derived from industry reports and average premiums charged by top insurance carriers for this type of business.

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

Business Interruption Insurance

Business interruption insurance provides crucial financial protection for businesses in the support activities for oil and gas operations industry. It helps compensate for lost income and extra expenses if operations are disrupted by events like fires, storms or other covered perils that could significantly impact revenue. Some key benefits include covering operating expenses during shutdowns, reimbursing extra costs to maintain operations during disruptions, and compensating for lost profits from events like natural disasters. The top use cases tend to involve losses from property damage, supply chain issues, emergency orders, or disruptions that prevent access to facilities and stop operations. Pricing is usually around 0.5-1% of annual revenue on average for companies in this industry.

Category List
Benefits
  • Provides income if the business suffers an interruption
  • Covers operating expenses like payroll if business activity is halted
  • Compensates for lost profits caused by events like natural disasters
  • Reimburses for extra expenses to maintain operations during disruptions
  • Helps keep business stable during downtimes and avoid losses
Use Cases
  • Loss of income if production or office facilities are damaged in a covered peril
  • Loss of income if key suppliers experience an insured property damage that impacts own production
  • Loss of income if pandemic/disease outbreak prevents operations or access to facilities
  • Loss of income during power outages that prevent operations
  • Loss of income due to mandatory evacuation orders during emergencies like hurricanes

Based on the average business interruption insurance pricing for oilfield services companies, which is typically 0.5-1% of annual revenue, and the average annual revenue for NAICS 213112 support activities for oil and gas operations companies being around $10 million, the estimated average business interruption insurance pricing would be between $50,000 to $100,000 per year.

Estimated Pricing: $50,000-$100,000

Commercial Cyber Liability Insurance

Businesses in the oil and gas support industry often handle sensitive operational and customer data. Commercial cyber liability insurance can help protect these businesses from the financial risks of data breaches or cyber attacks by covering costs related to issues like regulatory fines, legal fees, network disruptions, and more. Support activities for oil and gas operations play a critical role in infrastructure and rely on sensitive data, making them targets for cyber attacks. Cyber insurance can help cover costs of responding to incidents and show customers the company takes security seriously.

Category List
Benefits
  • Covers costs of data breach response and notification
  • Covers legal defense costs and fines/penalties if sued for privacy breach
  • Covers PR and crisis management costs after a cyber event
  • Covers costs of credit monitoring and legal advice for affected individuals
  • Covers litigation and settlement costs if sued by affected individuals
  • Covers costs to restore data or pay a ransom if systems are hacked
Use Cases
  • Data Breach: Covers the costs of a data breach including notification, credit monitoring, forensics investigation, legal fees, etc.
  • Network Security Failure: Covers costs resulting from network security failures including ransomware, hacking, denial of service attacks that affect business operations.
  • Privacy Regulation Fines/Penalties: Covers fines and penalties from violations of privacy regulations like HIPAA, GLBA, CCPA, etc.
  • Cyber Extortion: Covers ransom payments and other costs related to cyber extortion threats.
  • Third Party Claims: Covers claims and lawsuits brought by third parties affected by a data breach including clients, customers and business partners.

Based on research, the estimated average annual pricing for cyber liability insurance for businesses in the support activities for oil and gas operations (NAICS 213112) industry would be between $5,000 to $10,000. Pricing is dependent on factors like annual revenue, number of employees, cyber security practices/controls, claim history, and location. For a mid-sized business in this industry with $10-50M in annual revenue, 150 employees, and average cyber security practices, the estimated price would be around $7,500 annually.

Estimated Pricing: $7,500

Commercial Inland Marine Insurance

Commercial inland marine insurance provides crucial coverage for businesses in the support activities for oil and gas operations industry. It protects the specialized equipment, vehicles, rigs and materials that are critical to their daily operations both onshore and offshore. This type of insurance also offers business interruption coverage to continue paying employees and operating expenses if equipment is disabled or damaged. Commercial inland marine insurance is estimated to cost around $15,000 annually on average for businesses in the support activities for oil and gas operations industry.

Category List
Benefits
  • Coverage for equipment and machinery used in daily operations
  • Protection for equipment in transit or temporarily away from the primary location
  • Replacement cost coverage for damaged or stolen property
  • Business interruption coverage to continue paying employees and operating expenses if equipment is disabled
  • Coverage for specialty equipment with unique specifications
  • Worldwide coverage for equipment used at multiple project locations
  • Coverage tailored specifically for high-value oilfield assets and property
Use Cases
  • Coverage for specialized vehicles and equipment used in oilfield services like hydraulic fracturing units, pipe transportation trailers, coiled tubing units
  • Coverage for drilling rigs and equipment during inland transit
  • Coverage for materials and supplies in transit to and from rig sites
  • Coverage for newly acquired property to allow for coverage of additional vehicles and equipment as businesses expand
  • Coverage for rigs and equipment stored outdoors or in non-permanent structures at yards or work sites between jobs

Based on average premium rates for commercial inland marine insurance and risk factors associated with the support activities for oil and gas operations industry, the estimated average annual pricing would be $15,000. Risks such as working with heavy equipment, hazardous materials, and working in industrial environments increase costs. Premiums are also based on factors like number of employees, annual revenue, and types of equipment used.

Estimated Pricing: $15,000

Conclusion

Choosing the right combination of insurance policies helps oil and gas support service companies mitigate financial risks. General liability, commercial property, workers’ comp and commercial auto form a solid baseline, while professional liability, commercial umbrella and commercial inland marine policies expand protection further. Business interruption and commercial cyber liability also address common industry exposures.

Frequently Asked Questions

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