Drilling Contractor Insurance

Risk Assessment

With heavy equipment, flammable materials, and high-risk working conditions, drilling contractors face a unique set of hazards, and generic commercial policy won’t cut it.

Consider these real-world scenarios:

• A crew member is injured during a high-pressure equipment failure.
• A hydraulic spill contaminates nearby land, triggering a cleanup order and regulatory penalties.

Drilling operations are subject to strict contract requirements and site-specific safety regulations. Without proper coverage, one mistake can put your entire business on the line.

Key Insurance Coverages to Consider

Core Coverages:

• Commercial General Liability (CGL): Protects against third-party bodily injury or property damage—essential on any site with contractors, landowners, and operators involved.
• Contractor’s Equipment Insurance: Protects mobile gear like pipe handlers, generators, and control units.
• Commercial Auto or Fleet Coverage: For transporting crews and equipment to remote sites.

Specialty Coverages:

• Pollution Liability Insurance: Covers cleanup costs and third-party liability if drilling fluids, fuel, or other contaminants escape into the environment.
• Business Interruption Insurance: Helps recover income lost if a rig is out of service due to an insured event.
• Employer’s Liability & WCB Wrap-Around Coverage: Enhances protection for worker injury beyond basic WCB.

Common Claims for Drilling Contractors

Drilling contractors work in one of the most complex and hazardous environments in the energy industry. Even with strong safety procedures, incidents happen and when they do, the costs can be significant. Here are some of the most common insurance claims seen in drilling operations:

• Environmental Spill

  During rig relocation, a diesel fuel tank valve malfunctions, leaking fuel onto the lease site and contaminating nearby soil and water.

  Impact: Emergency environmental cleanup is required. You may also face fines, regulatory investigation, or third-party lawsuits from landowners.

  Coverage:

  • Contractors Pollution Liability Insurance covers cleanup costs, third-party property damage, and legal defense.
  • CGL policies often exclude gradual or sudden pollution unless specifically endorsed.

• Third-Party Injury

  A subcontracted welder trips over unmarked hydraulic lines running across the drill site. They suffer a serious injury and file a lawsuit alleging unsafe work conditions.

  Impact: Legal expenses, potential settlement costs, and reputational damage.

  Coverage:

  • Commercial General Liability (CGL) protects against claims of bodily injury and pays for legal defense and damages awarded.
  • Certificates of Insurance (COIs) with adequate liability limits are often required by operators for subcontractor access to site.

• Equipment in Transit Loss

  While transporting a generator and pump to a remote well site, the transport trailer overturns on an icy road, damaging the equipment beyond repair.

  Impact: Loss of critical operational equipment, delayed project timelines, possible breach of contract.

  Coverage:

  • Contractor’s Equipment Insurance and Inland Marine Coverage (if applicable) protect mobile equipment in transit.
  • Fleet or Commercial Auto Insurance covers vehicle damage and liability if another party is involved.

   

What Insurers Look For

When quoting drilling contractors, insurers consider:

• Safety Records & Training Programs: A strong COR safety program can reduce premiums and improve eligibility.
• Experience in the Field: Years in business and management’s drilling history.
• Operational Scope: Do you drill in in one provice only, or across multiple provinces and/or borders?
• Contractual Obligations: Some operators require specific limits or endorsements, especially around pollution and third-party liability.

Protect Your Operation With Confidence

At Armour Insurance, we understand the unique risks drilling contractors face—and we know how to build a policy that matches your needs. Whether you operate one rig or an entire fleet, we’ll help you secure coverage that works as hard as you do.

Let’s talk drilling contractor insurance get in touch with a broker today.