Alberta’s oil sands have the fourth-largest proven oil reserves in the world, after Venezuela, Saudi Arabia and Iran, with estimates of their output at about 158.9 billion barrels. In 2022, about 138,000 people were employed in Alberta’s upstream energy sector, says Statistics Canada’s 2023 Labour Force Survey, and since the 2009/10 fiscal year, oil sands royalties have been the largest source of provincial resource royalty revenue. According to the Government of Alberta, in the 2022/23 fiscal year oil sands royalties totalled $16.9 billion, accounting for 67% of non-renewable resource revenue for that period.
Alberta’s oil and gas entrepreneurs make up an integral part of the province’s economy. Business owners have unique needs when it comes to oil and gas insurance, and the experienced and knowledgeable insurance brokers here at Lane’s are able to provide province-specific advice for your coverage. Those who require oil and gas insurance range from oilfield consultants, surveyors, and service technicians to well servicers, welders, and pipefitters. Factors usually considered when determining the cost of oil and gas insurance generally include your location, the type of work you do, the equipment your business owns, your annual revenues, the number of employees your business has, and the types of coverages you need.
Wellhead insurance or commercial general liability insurance
In the oil and gas industry, the term “wellhead insurance” is often used instead of saying commercial general liability insurance. An example of when wellhead insurance would come into play is if someone (let’s say a supplier) has visited your well site, tripped over something and sustained a long-term injury. Wellhead (or commercial general liability) insurance provides coverage in the event of third-party property damage or bodily injury caused by your business’s operations.
Errors and omission insurance or professional liability insurance
Errors and omission insurance also has a pseudonym: professional liability insurance. A client or customer can charge a company with an error or omission (or professional liability) if the product or service you provide (or failed to provide) did not reach the standards of its description or fulfill your contract. An example of when it may be needed in the oil and gas field is if a contractor such as an engineering consultant provides incorrect specifications for a drilling project, resulting in equipment failure and project delays. Your client could sue for financial losses, and errors and omission insurance would help cover legal costs and damages.
Business interruption insurance
Business interruption insurance provides compensation for financial losses resulting from unexpected circumstances that cause temporary or long-term interruptions to your business operations. This type of coverage is imperative in the oil and gas industry when operations are commonly disrupted by events like equipment failures, pipeline leaks, natural disasters, or fires. For example, if a refinery shuts down due to a storm or a drilling rig halts production after a blowout, business interruption insurance helps recover lost income and pay for additional operating expenses.
Equipment insurance
Equipment insurance is essential in the oil and gas industry to protect against damage or loss of critical machinery like drilling rigs, pumps, or compressors. It’s needed when equipment is damaged by accidents, weather events, or transportation incidents. For example, a broken drill bit or damaged rig component could halt operations, making insurance vital for repair or replacement costs.
Pollution insurance
Unfortunately, residents near one of your company’s wells say that it has polluted their drinking water … and they have the tests to prove it. Pollution insurance in Alberta’s oil and gas industry provides financial protection against environmental damage, cleanup costs, and third-party liability caused by spills or contamination. In today’s ever-changing environment when it comes to environmental specifications, it is essential for companies to manage risks properly.
Pollution liability coverage includes first-party coverage for business interruption, cleanup, and emergency response costs, as well as third-party coverage for cleanup costs, property damage, and bodily injury. As there is a need to act fast, coverage also includes reimbursement for emergency response and cleanup costs.
Commercial property insurance
When an unforeseen event like a fire occurs, or a water pipe bursts, commercial property insurance not only protects the value of the building that houses your business from damage or loss, it goes beyond to protect the contents inside. This can include any equipment, machinery, furniture or even inventory that may be in the building when disaster strikes.
Commercial vehicle insurance
Commercial auto insurance with accident benefits coverage and third-party liability coverage is compulsory almost everywhere in Canada. While accident benefit requirements vary by province, in general, it provides compensation for medical and rehabilitation treatment, funeral costs, and income loss due to disability or death. Third-party liability provides coverage to drivers who, while driving your business’ vehicle, are held legally responsible for injuries suffered by someone else or for damages to another person’s property. In the case where a driver is held responsible for more than insurance covers, your company could be liable for the balance. As with accident benefit coverage, the minimum amount of coverage required varies according to your business and the number of vehicles you own.
Companies that have fleet vehicles may want to look into usage-based auto insurance to help bring down their costs.
Get more from Lane’s Insurance
Lane’s Insurance is a leading Alberta-based brokerage, offering highly competitive rates on oil and gas insurance and all your commercial insurance needs. Because Lane’s is a brokerage, we can get insurance companies bidding on your business, which helps you secure the best rates. To learn more about our commercial insurance products, contact us at our Calgary, Banff, Edmonton, and Alberta offices today.
