By Amanda Duncan, President, PartnerOne Environmental
Traditional environmental risk exposures have been insurable in the marketplace for many years. Services such as asbestos/lead abatement, soil/groundwater remediation, storage tank contracting, wastewater treatment, and environmental consulting are classic examples of a desirable environmental account. Jobsites are generally commercial or industrial in nature with mixed use, residential and municipal settings also quite common, since contamination can be found just about anywhere. We envision contractors in hazmat suits performing the necessary remediation and consultants reviewing reports, designing remedial plans, and analyzing data. Companies performing these operations are ideal insureds for environmental insurance carriers, assuming they have proper qualifications and a decent loss history.
What do you see when you visualize the Oil & Gas industry? Drill rigs and wells? Refineries? Sure, that makes sense. But in looking a little closer at these jobsites and you will find industrial buildings with asbestos, lead, and mold. After all, oil & gas facilities have been around quite a long time even though “energy” is a current buzzword. Storage tanks, both aboveground and underground, and miles and miles of pipelines have the potential to leak and corrode. Sludge pits containing oily dirt and water, waste mud, and other materials are common in the oilfield, as well as mobile wastewater treatment machines that recycle water used throughout the drilling process. Consultants are also in high demand at oilfield facilities. Environmental permitting, health and safety oversight, sampling/lab analysis, and tank/pipeline inspection are crucial to the process. If these services aren’t performed properly, the facility cannot continue to operate safely.
As you can see, the exposures found on oilfield jobsites and facilities are very similar to what we consider “normal” environmental risks. Contractors are providing cleanup, removal, and disposal of potentially hazardous materials. They also install and maintain equipment which could result in spills or leaks. They transport fluids, lubricants, and waste products. Consultants provide compliance oversight and monitor permitting requirements. They outline and manage safety and health procedures and take appropriate measurements and samples to ensure a safe jobsite. Consultants inspect tanks and pipelines for leaks and corrosion. They identify the correct facilities to accept waste generated at the facility and arrange for proper transport.
These similarities suggest that the same insurance coverages provided to an environmental contractor or consultant should also be considered for services providers in the oil & gas industry as well. General Liability policies alone cannot adequately address these exposures, so additional needed coverages may include:
- Contractors Pollution Liability: providing coverage for pollution claims arising out of a insured’s covered and completed operations.
- Professional Liability: providing coverage for errors or omissions that result from an insured’s professional services.
- Transportation Pollution Liability: covers an insured against pollution claims arising from transported materials.
- Non-Owned Disposal Site Coverage: coverage for liability arising from the disposal of waste into a third party non-owned disposal facility.
- Site Pollution Liability: coverage for an insured’s owned facility; contractor’s yard, office building, warehouse, etc.
- Products Pollution Liability: coverage for liability arising out of the failure of the insured’s product.
Contractors and consultants providing services to oil & gas clients have significant environmental exposures much like companies that perform work for the environmental industry. As with any class of business, it’s always important for an agent and broker to have a complete understanding of an oil & gas client’s operations and potential exposures. Coverage is available in the environmental marketplace to address these common risks.