Minimum recommended coverage:
Business Personal Property, Accounts Receivable, Computers, Contractors’ Tool and Equipment Floaters, Employee Dishonesty, General Liability, Employee Benefits Liability, Umbrella Liability, Automobile Liability and Physical Damage, Hired and Nonownership Auto Liability, Workers Compensation
Other coverages to consider:
Building, Business Income with Extra Expense, Valuable Papers and Records, Employment Related Practices Liability, Directors and Officers Liability–for profit, Environmental Impairment Liability, Stop Gap Liability, Federal Employers’ Liability Act (FELA) Workers Compensation
Property exposures at the specialty contractor’s own location consist of office operations and a yard for material, equipment and vehicle storage. In addition to the office staff, there may also be a research and training staff.
Equipment and material in the yard is not normally susceptible to damage, but scientific devices and other specialty equipment may present unique loss exposures. Repair operations may include welding, spray painting or other hazardous activities. These operations should be conducted in a safe manner. Equipment should be stored in a fenced and secure area to prevent theft. Business income exposures should be examined carefully if certain equipment cannot be replaced easily or quickly.
Inland marine exposures are for mobile and contractors’ equipment that must be transported to and from various jobsites and storage locations. Such machinery and equipment may be large or present unique or difficult transportation exposures. The training provided to drivers and haulers is extremely important and must be evaluated carefully, especially with respect to loading, tie-down and unloading.
Equipment kept at jobsites is subject to potential well blowout in addition to weather conditions such as tornados, hurricanes, ice and snow. Since these sites are usually occupied around-the-clock, theft potential is limited. However, employees of the well operator or other contractors may steal valuable equipment.
Crime exposures involve employee theft of equipment and funds. Equipment can be difficult to track when there are numerous jobsites at isolated locations. Jobsite ordering should be monitored carefully and inventory receipts verified.
Premises liability exposures can be significant or relatively limited, depending on the service provided. Services such as perforating and cementing have a direct impact on drilling operations and the potential for explosion. Other services are less directly involved and present a lower exposure. It is important to understand the specific service provided and what could happen if the contractor fails to perform its duties properly.
Environmental impairment exposures are comparatively limited for most service contractors because the oil and gas well operator is responsible for environmental impact at the jobsite. Such exposures may exist for any service contractor that cleans and closes a site that is tapped out or was unsuccessful. The primary responsibility remains with the well operator but any violations could also involve the servicing contractor. Contracts for work the servicing contractor does are particularly important and necessary to limit and control its exposures.
Automobile exposures involving transportation of equipment can be significant. Oversize loads require special procedures and handling. Proper tie-down is essential due to its bulkiness and weight. Because much of the driving is done on temporary access roads, transportation is more hazardous. Exposures involving transport of hazardous waste may arise if cuttings must be hauled away because of environmental concerns. Driver age, training, experience and driving records, as well as vehicle age, condition and maintenance are other important factors that must be considered.
Workers compensation exposures include numerous potential large loss situations. Common hazards are injuries from lifting; material handling; work with hand tools; and slips and falls due to oily and wet conditions at the jobsite. Complications arising from use, misuse, maintenance and transportation of large, heavy machinery present unique workers compensation hazards that must be reviewed. Special hazards include working at heights or in remote locations. Service contractors must often work under time constraints and deadlines that may involve working on equipment while it is operating. Service contracts may cause employees to disregard safety procedures in order to accomplish their tasks and this could be critical if an explosion or a fire could result from an error.