Energy On The Offensive #048 - How Companies Are Getting Away With Less Insurance

The Problem

Our agency, along with many other insurance professionals, has noticed a growing trend among oil & gas service and trucking companies purchasing $5M, $10M, or $20M excess umbrella policies that only extend over their general liability coverage—excluding their auto liability. As a result, they are left with just $1M in auto liability coverage.

They take this approach because it reduces their excess insurance costs by 70-80%. However, when their Certificate of Insurance (COI) is uploaded into ISN or Veriforce, it often passes review since the excess/umbrella box reflects the required limit, despite not covering auto liability. Many of these companies knowingly fail to meet Master Service Agreement (MSA) requirements but accept the risk due to the significant cost savings this deceptive practice provides.

The Solution

Operators should require that the schedule of underlying policies for excess/umbrella coverage be uploaded into ISN or Veriforce. This would ensure transparency by explicitly showing whether auto liability is included, preventing companies from bypassing insurance requirements.

If You’re A Service Company

If you’re a service company that invests in the right insurance while dealing with rising premiums—only to compete with fly-by-night operators cutting corners with unsafe equipment and inadequate coverage—your competitors are likely not carrying the proper insurance. Share this message with your customers and help put an end to this.

If You’re An Operator

Your Master Service Agreement (MSA) includes follow form excess auto liability requirements for a reason. With plaintiff attorneys becoming increasingly aggressive, ensuring your service vendors meet minimum coverage standards is more critical than ever. The solution is simple—require the upload of one additional policy form to verify compliance.

Reach out with any questions. Reply to this email or call (501) 581-7226