The oil industry is notorious for its volatility, as the prices are always changing. Part of your job as an oilfield operator is to manage that shifting industry to reduce risk while navigating complex legal requirements. An oil & gas insurance agent can assist you with risk management in a few important ways.
How Oil & Gas Insurance Helps With Risk Management
1. Contractual Renegotiations
It’s common for companies to try to renegotiate their service contracts as prices and demand change. A contract that can cut costs might seem favorable at first, but it could unexpectedly shift liability from the operator to the contractor. If you’re newly exposed with some assumed liability, your insurance agent and insurance underwriters can work with you to determine whether and how these newly exposed liabilities can be covered by your policies.
2. Risk Financing
Technology in the industry is expensive, so your company may have extensive financing to keep up with the latest advancements. If your debt ratio is already high, you may have trouble securing collateral for risk transfer programs. Oil & gas insurance can lower deductibles or use a guaranteed cost program to eliminate cost uncertainty.
3. Tiered Insurance Requirements
Contracts typically outline the insurance requirements including limits, coverage for subcontractors or other insurance providers, and lines of coverage. The agreement will require one party to obtain insurance and provide additional insured status to the other party. Your insurance agent and legal counsel can determine the appropriate limits and coverage arrangements.
For trusted experts in oil & gas insurance, contact Western States Insurance Group, Inc. in Lovington, NM. Since 1997, they’ve been protecting the interests of clients throughout Lovington, Hobbs, Lea County, and the surrounding areas. This full-service insurance agency will help you choose the right coverage from their wide range of quality, affordable products. Learn more about how they can help on their website or call (575) 396-1318 to schedule a consultation. For the latest news and updates, follow Western States Insurance on Facebook.