Because Spills Happen, Oil and Gas Contractors Need Insurance

Because Spills Happen, Oil and Gas Contractors Need Insurance

Source: http://www.canadianunderwriter.ca, May 12, 2016

The oil and gas businesses are messy ones, as contractors who work in those fields can attest. That’s because accidents happen, as they do in just about any other industry. But because of that risk, it’s important for contractors working for oil and gas companies to have their own insurance policies above and beyond whatever a company may provide. This can add significant peace of mind for a low cost, and would therefore likely be a boon to any worker in the industry.

In the past several years, Alberta in particular has been the site of many spills from oil and gas pipelines, which is understandable given how much industry activity takes place in the province, according to a report from the CBC. But it’s worth noting that the frequency of these unfortunate incidents is starting to draw significant attention from a number of independent groups and officials in provincial government agencies. In the past five years or so, there have been at least a handful of major spills that led to some sort of action being taken against the companies in charge of the pipelines.

When spills happen, contractors need the right insurance.

What happens?
Typically, when spills take place, they end up having a significant impact on the area surrounding them, both in terms of how they affect people living in the region, and the environment as well, the report said. Often, energy watchdogs and government agencies will come down on the companies deemed responsible for the spills with reprimands, sizable fines, and new rules about how those companies must conduct their business going forward to better ensure such incidents do not happen again.

Of course, the severity of the spill, and the issues that led to it, will be taken into account when considering the punishment. However, because many of the people working on the pipelines are contractors and not actual employees, these issues might end up being problematic for them as well. It can be difficult for them to proceed with certainty in their job security when such incidents arise, and for this reason, having the right kind of insurance is vital.

What kind of insurance is best?
When it comes to the types of insurance coverage oil and gas contractors should be buying, the answer is likely three-fold. First and foremost they should probably be buying pollution-specific liability insurance, just in case an innocent mistake they may have made in the course of doing their jobs is determined to have been a cause of an accident. Part of the reason companies contract out this work is to limit liability on their end, which means that it can be vital for contractors to carry such coverage themselves.

It’s important to note that contractors’ commercial general liability policies usually exclude pollution. So relying on that basic blanket coverage would leave oil and gas contractors with a significant exposure in the event of a spill.

Likewise, it’s probably wise for those workers who must provide their own tools for the job to get those insured as well, as a means of financially protecting themselves if something goes wrong. The more that can be done to get the right kind of insurance coverage, and the right amount, the better off oil and gas contractors will be in the long run.

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