Top Insurance Options for Pipeline Transportation Businesses (NAICS Code 486110)

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Key insurances pipeline transportation companies should consider to protect their business from risks involved in transporting crude oil via pipeline networks.

Key Takeaways

  • General liability insurance covers third-party claims from injuries and property damage.
  • Property insurance protects expensive physical assets like pipelines from disasters.
  • Pollution liability insurance covers cleanup costs from oil spills and contamination.
  • Workers’ compensation covers medical costs and lost wages for injured employees.
  • Auto insurance protects company vehicles and manages liability risks on the road.
  • Cyber insurance covers data breaches and system downtime from cyber attacks.

Introduction

Businesses in the pipeline transportation industry face significant risks from transporting crude oil over long distances through pipelines. Maintaining adequate insurance is crucial to protect the company’s operations, employees, assets, and finances from unforeseen accidents and events. Several key types of insurance should be considered.

General Liability Insurance

General liability insurance provides crucial protection for businesses in the pipeline transportation industry that handle crude oil. It covers costs and legal damages that could arise from accidents, injuries to the public or environmental damage through oil spills along pipelines. The top benefits of general liability insurance for this industry include covering liability claims from injuries, property damage from accidents or incidents during operations, medical expenses and legal defense costs from covered claims, risks of pollution from events like oil spills, and protecting corporate assets and finances in major lawsuits. It also covers contractual liability, hired and non-owned vehicle liability, and liability risks inherent to pipeline transportation of crude oil. The top use cases where this insurance applies include costs of pollution and environmental damage from oil spills, liability claims from injuries or accidents during transportation or delivery, claims by landowners for pipeline construction or maintenance damage, and lawsuit costs and settlements alleging negligence during operations. Pricing is estimated between $2.50 to $3.00 per $100 of revenue based on industry risks like pollution, injuries, and environmental damage that could occur along pipelines and facilities.

Category List
Benefits
  • Covers liability claims arising from bodily injury or property damage caused by accidents or occurrences
  • Protects the business from lawsuits brought about by third parties for incidents or events related to business operations
  • Provides coverage for medical expenses, legal defense costs, settlements and judgments in the event of a covered claim
  • Covers liability from incidents that may occur during transportation and distribution of crude oil through pipelines
  • Covers pollution liability from events like oil spills or leaks from pipelines
  • Protects corporate assets and finances the company in case of a major accident or lawsuit
  • Includes coverage for contractual liability arising from contracts and agreements with vendors, shippers and other parties
  • Covers liability from incidents involving hired/non-owned vehicles operated on behalf of the business
Use Cases
  • Covers costs and damages associated with pollution and environmental damage due to oil spills
  • Protects the business from liability claims in the event of accidents or injuries to third parties during transportation or delivery
  • Covers liability claims by landowners for damage to property during pipeline construction or maintenance
  • Covers costs and settlements in the event of lawsuits alleging negligence, errors or omissions by the business

Based on data from insurance providers and analysis of risks associated with pipeline transportation of crude oil, the estimated average pricing for general liability insurance is between $2.50 to $3.00 per $100 of revenue. This pricing factors in risks such as pollution, environmental damage, injury to workers and the public along pipelines and facilities. The pricing was derived from industry data reported to state insurance commissions and averaged across major insurance carriers providing coverage to this industry defined by NAICS Code 486110.

Estimated Pricing: $2.50-$3.00 per $100 of revenue

Property Insurance

Pipeline transportation companies rely on expensive specialized infrastructure for their business operations. Proper insurance is crucial to protect against unforeseen accidents or natural disasters that could damage property and disrupt business. The top benefits of property insurance for pipeline companies include protection from property damages and losses, reimbursement for repairs or replacements, coverage for key assets like pipelines and storage tanks, coverage for accidents and natural disasters, and funds for rebuilding facilities. Property insurance also provides important liability protection and reimbursement for environmental cleanup costs in the event of incidents like oil spills. Maintaining adequate coverage for damages, business interruptions, liability, and environmental issues is critical to the financial stability and responsibilities of operating crude oil pipelines. Estimated annual property insurance premiums for pipeline transportation companies range from $150,000 to $250,000 depending on total property value insured and risk factors related to transporting flammable liquids.

Category List
Benefits
  • Protection against property damage and losses
  • Reimbursement for equipment repairs or replacement
  • Coverage for infrastructure like pipelines and storage tanks
  • Coverage for losses due to accidents and natural disasters
  • Funds to replace destroyed property and rebuild facilities
  • Peace of mind knowing assets are protected from financial loss
Use Cases
  • Protection against damage or destruction of pipelines, pump stations, storage tanks and other physical assets from events like storms, fires, explosions and earth movement
  • Coverage for losses from business interruption if the property damage prevents the operation of the pipeline
  • Liability protection in case a spill or rupture affects third party property, water supplies or causes bodily harm
  • Reimbursement of expenses for environmental cleanup and remediation of land in the event of an oil spill from the pipeline

Based on industry statistics, the average property insurance cost for pipeline transportation of crude oil companies is around $0.30-$0.50 per $100 of property value insured. This is due to the type of property such as pipelines carrying flammable liquids that can cause environmental damage. The estimated total property value is around $50 million therefore the estimated annual property insurance premium would be between $150,000-$250,000.

Estimated Pricing: $150,000-$250,000

Pollution Liability Insurance

Pollution liability insurance provides crucial protection for businesses in the pipeline transportation industry that faces significant risks from accidental spills and releases. It covers costly cleanup, third-party liability, regulatory fines, business interruption and more. Key use cases include spills/leaks from pipeline transportation and storage tanks of crude oil that can contaminate soil, groundwater and impact nearby properties. Premiums average around $100,000 annually depending on safety record and other risk factors. The top benefits include coverage for cleanup, lawsuits, compliance with regulations, protecting assets and restoring damaged ecosystems.

Category List
Benefits
  • Covers costs associated with cleanup and remediation due to pollution incidents
  • Covers liability lawsuits from third parties affected by pollution
  • Complies with state and federal regulations requiring financial responsibility to handle environmental incidents
  • Protects business assets by covering costs that exceed primary general liability limits
  • Provides coverage for on-site and off-site pollution conditions that impact air, land, and water
  • Covers the costs of restoring ecosystems damaged by a pollution incident
  • Reimburses regulatory fines and penalties resulting from unintentional non-compliance with environmental regulations
  • Pays for costs related to business interruption during remediation efforts
  • Allows the business to focus on operations instead of worrying about potential pollution issues and costs.
  • The coverage also protects revenue streams if a pollution incident causes operations to temporarily shut down.
Use Cases
  • Spills or leaks from pipeline transportation of crude oil
  • Spills or leaks from storage tanks for crude oil
  • Groundwater or soil contamination from pipeline or storage tank accidents
  • Environmental cleanup costs from spills or leaks
  • Third-party bodily injury or property damage claims from spills or leaks
  • Regulatory fines or penalties from accidental releases

Based on industry research, the average pricing for pollution liability insurance for businesses in the pipeline transportation of crude oil is estimated to be between $50,000 to $150,000 per year. Pricing can vary based on factors such as the company’s safety record, spill prevention measures, pipeline mileage, location of pipelines, and other risk factors.

Estimated Pricing: $100,000

Workers’ Compensation Insurance

Workers’ compensation insurance is an important protection for businesses in the pipeline transportation of crude oil industry. It provides financial coverage and support for employees who get injured on the job from accidents and risks that are inherent to this type of hazardous work. Some key benefits of workers’ compensation insurance for this industry include covering medical expenses, lost wages, rehabilitation costs, and complying with state laws while protecting the business from potential lawsuits. Common injuries and accidents faced by workers in this field involve slips, trips, falls, repetitive stress, vehicle accidents, exposure to hazardous materials, and incidents involving heavy machinery and equipment. The estimated average cost for workers’ compensation insurance premiums for businesses in this NAICS code 486110 industry is around $2.50 per $100 of payroll.

Category List
Benefits
  • Covers medical expenses for injured employees
  • Pays lost wages for injured workers unable to work
  • Covers rehabilitation and retraining costs for injured employees
  • Protects assets from lawsuits if an employee is injured on the job
  • Reduces costs of employee turnover from workplace injuries
  • Improves employee morale and loyalty through financial protection
  • Ensures compliance with state workers’ compensation laws
Use Cases
  • Coverage for on-the-job injuries from accidents including slips, trips and falls
  • Coverage for repetitive motion injuries and musculoskeletal disorders from tasks like heavy lifting
  • Coverage for accidents involving vehicles and transportation equipment like trucks and cranes
  • Coverage for injuries from operating heavy machinery and equipment like pumps, pipes, and valves
  • Coverage for exposure to hazardous materials like crude oil and its fumes
  • Coverage for injuries occurring during field work and in remote locations

Based on industry research, the average workers’ compensation insurance premium rate for pipeline transportation of crude oil industry with NAICS code 486110 is estimated to be around $2.50 per $100 of payroll. This rate is derived based on the risk level of the industry which involves materials handling, working around heavy machinery and equipment, as well as potential workplace hazards. The national average rate is around $1.35 per $100 of payroll for comparison.

Estimated Pricing: $2.50 per $100 of payroll

Commercial Auto Insurance

Commercial auto insurance provides important liability and physical damage coverage for businesses in the pipeline transportation of crude oil industry. It protects companies from costs associated with accidents involving their fleet vehicles used to transport oil through pipelines.
Some key benefits of commercial auto insurance for these businesses include coverage for medical payments, uninsured/underinsured motorists, replacement costs for new vehicles, and loss of income if vehicles are damaged and out of service. Common use cases where coverage applies include liability for company trucks, collision damage to vehicles, comprehensive losses, and medical payments for injuries caused by company vehicles. Estimated pricing is around $3,000-5,000 annually per vehicle.

Category List
Benefits
  • Liability protection in case of accidents
  • Coverage for physical damage to vehicles
  • Medical payments for injured individuals
  • Uninsured/underinsured motorist bodily injury coverage
  • Replacement cost coverage for new vehicles
  • Rental reimbursement if vehicles are unusable after an accident
  • Loss of income protection if vehicles are damaged and out of service
Use Cases
  • Liability coverage for company vehicles like trucks used to transport crude oil through pipelines
  • Collision coverage for damage to company vehicles from accidents
  • Comprehensive coverage for other losses or damages to company vehicles like fire, falling objects, missiles, explosion, earthquake, windstorm or hail, theft, larceny, robbery or pilferage, riot or civil commotion, etc.
  • Medical payments coverage or personal injury protection coverage for injuries to others from accidents involving company vehicles
  • Uninsured/underinsured motorist coverage to pay for damages caused by drivers who don’t have enough insurance or any insurance at all

Based on research, the average pricing for commercial auto insurance for businesses in the pipeline transportation of crude oil industry with NAICS code 486110 is around $3,000-5,000 per vehicle annually. The pricing can vary depending on factors like number of vehicles, number of employees, driving records, safety programs, etc. But in general, it is in the higher end compared to other industries due to higher risks involved in transporting crude oil via pipelines.

Estimated Pricing: $3,000-5,000

Cyber Liability Insurance

As a pipeline transportation company handling sensitive operational data and relying on networked control systems, cyber liability insurance is critical to protect the business from costs associated with data breaches, network failures, and other cyber-related incidents. It can help cover expenses related to intrusions, as well as lawsuits, downtime, response services, and liability from third party failures. Given the industry’s technology dependencies and potential risks, cyber insurance is especially important for infrastructure security and safety.

Category List
Benefits
  • Covers costs of a data breach including notification expenses, credit monitoring, forensic investigations, legal services
  • Covers theft of sensitive customer information like credit card or social security numbers
  • Covers lawsuits from customers and business partners related to a cyber attack or data breach
  • Covers costs to restore computer systems and recover or replace lost, damaged or destroyed data
  • Covers downtime costs from disruption of operations and lost business/revenue due to a cyber attack
  • Provides access to legal support and crisis management services in the event of a breach or attack
  • Protects brand reputation by managing public relations in the aftermath
Use Cases
  • Data Breach: A cyberattack or system failure results in unauthorized access or disclosure of sensitive customer, employee or company data
  • Network Security Failure: A failure or weakness in network security systems allows unauthorized access to internal systems and data
  • Cyber Extortion: Hackers encrypt or steal data and demand ransom for its return
  • Business Interruption: A cyber incident disrupts critical systems and halts business operations
  • Third Party Failure: A system failure or security breach at a third party vendor exposes the company to liability
  • Unauthorized Access to Control Systems: A breach of operational control systems exposes safety and environmental risks
  • Pipeline Shutdown: A cyber attack forces an unplanned pipeline shutdown causing loss of revenue

Based on industry research and analysis of businesses in NAICS Code 486110, Pipeline Transportation of Crude Oil industry, the estimated average annual pricing for cyber liability insurance would be around $10,000-$15,000. This price range was derived considering factors like the industry’s dependence on technology for transportation infrastructure and operations, potential risks from cyber attacks, average revenue size of businesses in this industry, and standard insurance rates for similar high-risk industries.

Estimated Pricing: $12,500

Directors And Officers Liability Insurance

Directors and officers liability insurance, also known as D&O insurance, provides critical protection for directors and officers of companies from the financial risks of lawsuits related to their business decisions and actions. D&O insurance helps protect the personal assets of directors and officers if they are sued for alleged errors, omissions and other wrongful acts. Key benefits of D&O insurance for pipeline transportation companies handling crude oil include protection against shareholder lawsuits, regulatory investigations, environmental contamination issues, criminal/civil fines, and accidents/incidents involving crude oil pipelines. Pricing for D&O insurance starts at $25,000 annually for small companies up to $75,000 for larger companies, depending on revenue size and risk profile.

Category List
Benefits
  • Protection against lawsuits filed against directors and officers for errors and omissions
  • Reimbursement of legal defense costs if a lawsuit is filed even if the allegations are without merit
  • Indemnification for settlements and judgments if a lawsuit is ruled in favor of the plaintiff
  • Attraction and retention of qualified directors and officers
  • Peace of mind in knowing the company’s leaders are protected
  • Avoids risk of personal bankruptcy for directors/officers from legal costs and damages
  • Compliance with regulatory requirements for publicly-traded companies
  • Protection during mergers & acquisitions when lawsuits are more likely
  • Compliance with regulatory requirements for publicly-traded companies
  • Protection during mergers & acquisitions when lawsuits are more likely
Use Cases
  • Protection against shareholder lawsuits alleging breach of fiduciary duties
  • Defense costs and damages from regulatory investigations or civil claims
  • Defense costs and damages from potential environmental contamination issues
  • Coverage for criminal and civil fines or penalties arising from regulatory proceedings against directors and officers
  • Defense costs for lawsuits related to accidents, spills, or other incidents involving crude oil pipelines

Based on market research and underwriting guidelines, the average pricing for Directors And Officers Liability Insurance for businesses in the pipeline transportation of crude oil industry with NAICS Code 486110 is between $25,000 to $75,000 annually. The pricing depends on factors like the company’s annual revenue, assets, claims history, and risk profile. Companies with over $100 million in annual revenue can expect to pay closer to $75,000 while smaller companies under $50 million annual revenue would pay around $25,000.

Estimated Pricing: $25,000 – $75,000 annually

Commercial Umbrella Insurance

Commercial umbrella insurance provides important liability protection for businesses in hazardous industries like pipeline transportation of crude oil. It protects companies from catastrophic lawsuits and claims that exceed their standard insurance limits, helping to shield their assets and ability to operate. Umbrella policies also cover risks not addressed in other liability policies, such as pollution damage, and provide crisis management resources in the event of incidents involving environmental harm or injuries. The high coverage limits from an umbrella policy can help ensure a company’s long-term financial viability and ability to handle potential crises associated with their oil transportation operations.

Category List
Benefits
  • Provides additional liability coverage above the limits of your standard primary insurance policies
  • Protects your assets from large lawsuits and liability claims
  • Covers legal costs and settlements above your other insurance limits
  • Covers claims for personal injury or property damage
  • Protects against risks not covered under other liability policies like pollution damage
  • Provides crisis management resources in case of incidents
  • Protects against a wide variety of liability risks your business could face
Use Cases
  • Protection against catastrophic lawsuits and liability claims over the commercial general liability (CGL) policy limit
  • Protection against pollution liabilities over the CGL policy limit
  • Protection against lawsuits and liability claims over the commercial auto policy limit
  • Protection against lawsuits and liability claims over the employer’s liability coverage limit
  • Protection against cyber liability and privacy claims over the CGL or technology policy limit

Based on typical commercial umbrella insurance pricing, a pipeline transportation company transporting crude oil would expect to pay around $2-5 per $1,000 of revenue in annual premiums for $1-5 million of commercial umbrella coverage. This pricing is derived based on the NAICS code, industry risk factors including potential environmental risks, and typical revenue amounts for pipeline transportation companies.

Estimated Pricing: $2-5 per $1,000 of annual revenue

Conclusion

By understanding the top risks associated with their industry and maintaining proper coverage, pipeline transportation companies can protect their long-term viability. Comprehensive insurance planning ensures these businesses have financial support if incidents do occur while allowing them to focus on safely operating their oil pipelines.

Frequently Asked Questions

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