How much does oilfield contractor insurance cost?

Insurance is priced on exposure, and every policy you carry measures exposure differently. IRMI defines the exposure base as "the basis to which rates are applied to determine premium," and lists payroll for workers comp and general liability, receipts or sales for general liability, and "per unit" for auto.

So the real answer to "how much" is a worksheet: your payroll split by job type, your revenue, a vehicle list with weights and radius, your loss runs, and the MSA you are trying to satisfy. Without those, any figure is a guess. We would rather walk you through the factors so you can see which ones you control.

Here is what moves the price on each of the usual oilfield policies.

Workers comp is usually the biggest single line for a service company with crews in the field, and its math is the most transparent.

The Texas Department of Insurance explains it this way: each employee's payroll goes into a Texas classification, the payroll for each class is multiplied by the insurer's rate per $100 of payroll, and the class premiums are added together. The rate itself is the loss cost NCCI files for that class, multiplied by the insurer's own loss cost multiplier, which covers expenses like commissions, taxes and profit.

Two adjustments come next:

• Experience mod. An experience rating modifier based on your past loss history may be applied. A mod under 1.00 lowers premium and a mod over 1.00 raises it. See what an experience mod is.
• Schedule rating. TDI describes schedule rating as optional: an insurer may apply a debit or credit for characteristics of your business that the rate does not reflect. Each insurer files its own maximum and minimum percentages, so the room to move differs by company. See whether a safety program lowers premiums.

Because payroll is the base, the policy is audited after it ends and the premium is adjusted to your actual payroll. Texas law also requires you, as policyholder, to disclose your operations, ownership changes and payroll to your workers comp insurer (Texas Insurance Code Section 2051.101). Getting the class code right matters as much as the rate. See how class codes work for oilfield crews.

Commercial auto is rated per vehicle, and trucks are sorted into classes before any rate applies. A Texas Automobile Insurance Plan Association rate bulletin published by TDI shows the structure: trucks are grouped by size class (light, medium, heavy, and truck-tractors by weight), by business use (service, retail, commercial), and by radius (local up to 50 miles, intermediate 51 to 200 miles, long distance over 200 miles). Each combination carries its own factor.

For oilfield fleets this means a few things are worth checking at every renewal: that each unit is in the right weight class, that the radius matches where the truck actually runs, and that the driver list is current. See oilfield auto insurance and MCS-90.

Most of the cost questions we see start with an MSA. The operator's insurance exhibit decides which policies you have to buy, the minimum limits, and the endorsements, such as additional insured, waiver of subrogation and primary and non-contributory wording. A requirement for a high umbrella limit or a separate pollution policy changes the total far more than a small rate difference on the primary policies.

That is why we ask for the MSA before we talk price. If two operators ask for different limits, you buy to the higher one. See what limits operators commonly require and the MSA insurance requirements guide.