Insurance for the Evolving Needs

of Oil and Gas Contractors

 

Oil and gas contractors in the upstream energy segment have risks that arise from their place in the pipeline. ProSight offers a three-pronged approach that helps protect all aspects of their business.

 

Underwriting experts
who know the industry.

We understand onshore oil and gas risks, so we deliver customized insurance
solutions to help position business for
success—not only today,
but tomorrow, too.

 

A multi-line solution
to rely on.

GL, property, umbrella, workers’ comp, inland marine, commercial auto. We provide the coverages that are consistently one step ahead, even during fluctuating market conditions.

 

Proactive loss control to
help manage risk.

We give oil and gas customers access to SafetyNow®, an online portal for safety training and education. It’s just one way we partner with our insureds for proactive risk management.

Mastering the Master Service Agreement

5 Musts for Oil & Gas Contractors

Great, you’ve been hired as a contractor by Exxon, Chevron, or one of the other big players in the oil and gas industry. Enter the Master Service Agreement—a legal agreement that lays out the terms and conditions of this job and any future projects you do with them. Sounds efficient. You can negotiate the specifics just once upfront, then work on a per job basis knowing all the legal terms are already in place.

Not so fast.

The Big Guys like to draft these MSAs with their corporate interests in mind, so it’s very important for oil and gas contractors to make sure the MSA protects your interests, too. We’re here to help with the 5 MSA Musts below that come from years of experience in the oil and gas industry and seeing the types of claims that could occur.

 

 

1. Comprehend the contract.

Repeat this ten times fast because it’s that important. A well-drafted MSA defines the rights, obligations, and risk allocation of all involved and outlines who is responsible for what. Take knock-for-knock indemnity, for instance, which means that each party is responsible for injuries or damages to their own employees and equipment. Knock-for-knock contracts are widely used in the oil and gas industry, so it’s smart to educate yourself on all the details involved: indemnity limits, types of loss included, definition of negligence and misconduct, and recovery.

 

 

2. Define Company, Contractor, and everyone in between.

Make sure the MSA defines the parties entering into the agreement. It’s also important to define all the different subcontractors on the project and include them in the definition of the indemnified groups in the event you need to pass through a claim. Pass-through indemnity is arguably the most critical protection to have in an oil and gas contract, so it’s important to know if you need a pass-through provision in your MSA and, if so, if your insurance policy covers pass-through indemnity.

 

 

3. Include necessary state-specific language.

Make sure the MSA includes language that conforms to individual state statutes where you’re contracted to work since different states handle issues differently, such as those with anti-indemnity laws. It’s important to know this and look for such provisions in the contract. Don’t risk your MSA being non-responsive due to missing state language.

 

 

4. Know where you fall in the risk hierarchy.

Are you the General Contractor on the job, or have you been subcontracted to complete a specific portion? Depending on the answer, your ability to tender a claim could change. GCs should seek additional insured status on their subcontractor policies in case they’re named in a lawsuit related to work the sub performed. Conversely, if you’re a subcontractor, your ability to transfer risk up the chain is limited, so you should be aware of the potential liability you could have.

 

 

5. Understand the insurance requirements.

To support the terms of the indemnity agreement, the MSA will often include insurance requirements that each party is obligated to have. Are you required to have additional insured status? A waiver of subrogation clause? What about primary and noncontributory language around payment of claims? Any pollution provisions? It’s important to understand these and other insurance terms in your policy and how they could affect you. If you’re unsure, ask your broker for clarification. One last note: Make sure the minimum insurance requirements don’t limit or restrict the indemnity obligations.

 

 

When it comes to working with the big players in the oil and gas industry, having an MSA is important—but what goes into that MSA is just as important. Even if you’re contracted by a smaller entity, it’s still essential to have an MSA or risk putting your business in jeopardy. And while it’s easy to skip the contract and just shake on it because you’ve worked with Joe Contractor before, it’s not in your best interests as a business owner. An MSA is important in bringing clarity to roles and responsibilities. And, hey, if you want to seal the MSA with a handshake after signing, go for it!

 

The information contained herein is for informational purposes only, shall not be considered legal advice, and is not intended to be used without consultation of an attorney. ProSight Specialty Insurance Group, Inc., its parent, affiliates, and subsidiaries strongly recommend that contractors entering into any agreement have them drafted and reviewed by an attorney in accordance with applicable federal, state, and local laws.

 

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Meet Our Experts

 

 

Erin Cullen

SVP, Programs & Binding
ProSight Specialty Insurance

Meet Erin

 

 

Justin Eoff

Senior Underwriter
ProSight Specialty Insurance

Meet Justin

Meet Our Partner

 

The experts at Petrosure have deep knowledge of the exposures and challenges facing oil and gas contractors. They work with specialists in their business segment that align with their customized approach to underwriting and claims management.