Oil & Gas Contractors: Sudden and Accidental Pollution Coverage

By Justin Radcliffe, Vice President and South Central Regional Manager

Many oil and gas insurance carriers offer Sudden and Accidental (S&A) Pollution coverage for property damage and bodily injury within the General Liability coverage, but is it enough pollution coverage for your contractors’ operations? Several of these policies exclude clean-up costs and restrict other pollution coverage that is now commonly offered in the pollution/environmental market. Now that S&A Pollution coverage is an addition in on the GL form, markets have evolved to offer a more comprehensive Contractors Pollution Liability product.

Sudden and accidental coverages have a discovery period and reporting period that can vary per carrier, and those periods may be completely different from when the pollution event actually occurred, therefore potentially affecting contractors at every stage of the operations. For example, when an oil and gas contractor arrives at a well site, there can be several operations going on at the same time. During a pollution event, it can usually be assumed that every contractor affiliated with that wellsite will incur defense costs.

Or, for example, a wellsite contractor is working on a producing well in the middle of nowhere for an operator and notices a leak, spill, or a sheen on the local pond. Once the pollution issue is discovered and reported, it can be assumed that every contractor that has been to that wellsite could be required to provide clean up efforts, or be brought into a claim that leads to a lawsuit. Some contractors at the site may have very little control over how the pollution event happened, when it happened, and how clean up operations have been conducted previously and moving forward.

A broad form claims-made Contractors Pollution Liability (CPL) Policy can be a solution. This policy responds to a pollution event without discovery and reporting periods, as long as the policy is in place at the time of the event. CPL coverage has evolved over the years and continues to offer broader coverage to contractors. Some of the customizable coverage options are:

  • Property Damage
  • Bodily Injury
  • Built in Transportation Costs
  • Emergency Response Costs
  • Non-Owned Disposal Site Coverage
  • Project Specific Excess
  • Coverage for Work on Behalf on Insured
  • Mold Coverage
  • Defense Outside Limits
  • Catastrophe Management

And good news for your insureds, as the Broad Form CPL policy has become more common, carrier competition has increased and premiums are as low as they have ever been. We have seen some minimum premiums start as low as $1,500 with $5,000 SIR, making this coverage very affordable for contractors of all size.

We can also offer CPL coverage on a combined for with GL and Professional Liability in most instances.

For more information on Sudden & Accidental coverage, or to discuss a specific account, please email us or call (800) 596-2156.