By Patrick Manning, Associate Account Executive
One of the fastest growing fields in the insurance marketplace today is in energy and the industries that support it. As this segment continues to grow, many insureds are beginning to shift into supporting roles and are taking on additional contracts that they wouldn’t have considered previously. One of the many terms used to categorize contractors working in places such as the oil field and various well sites is “roustabout contractor.” This particular phrase is more of a catch-all and is used to identify support contractors whose operations do not directly come into contact with the well. Roustabout contractors are typically viewed as a contractor who will do anything and everything in the oil field and because of this most markets stay away from such risks. The markets that do have a tendency to write this type of contractor tend to only offer Sudden and Accidental Pollution coverage, which can leave your insured involved in a loss occurring after the work is done; they are brought into a claim that their insurance company is now denying coverage for. The alternative to a Sudden and Accidental coverage market is to place the risk in a true energy market with Gradual Pollution coverage. The problem with this is that these markets tend to have a fairly substantial minimum premium, which makes it difficult for smaller environmental contractors trying to get into the energy world to obtain coverage. This ultimately leads to the insured avoiding work that would otherwise be financially advantageous.
The solution to this problem is understanding the contractor beyond the broad term of “roustabout contractor.” It is important to identify exactly what the contractor is doing and how their revenues are broken out. By doing this, you will be able to properly categorize these environmental contractors and have them placed with more suitable markets. A few examples of contractors that are being classed as roustabout contractors are: pipeline/weld inspection, remediation contractors, tank installation/repair contractors, pit digging/lining contractors, and safety consultants/trainers. Each of these contractors would easily be written with an environmental market, but due to their close proximity to the oilfield and classification as a “roustabout contractor” the markets tend to stay away. If the appropriate information is provided to environmental carriers, including a detailed description of operations and revenue breakout, they will better understand that these insureds belong in the environmental marketplace.
Most environmental markets have the ability to offer coverage that meets and exceeds the requirements of the contractor’s Master Service Agreement/contract. Coverage can include: General Liability, Contractors Pollution Liability (on an occurrence form, which includes Bodily Injury, Property Damage, and Clean Up costs), Professional Liability (where applicable), Transportation Pollution Liability, Non-owned disposal Site coverage, Blanket Additional Insured including completed operations and sole negligence, Blanket Waiver of Subrogation, Primary non-contributory wording, and Action Over. More often than not, these environmental markets will have a lower minimum premium than energy markets.