What is Oil and Gas Drilling Rigs and Equipment Insurance?
Oil and gas drilling rigs and equipment insurance is a group of coverages designed to help protect the high-value machinery, tools, and mobile units used in exploration and production. These policies can address physical damage to rigs and equipment, as well as certain third-party liability exposures that arise from drilling, well servicing, and related operations.
Because oil and gas work often takes place in remote, hazardous locations, the risk of damage, breakdown, or accidents can be high. Specialized insurance helps operators, contractors, and service companies manage these risks and meet many contractual and regulatory requirements.
Who Needs Oil and Gas Drilling Rigs and Equipment Coverage?
This type of insurance is commonly needed by businesses involved in:
- Onshore and offshore drilling operations
- Workover and well-servicing activities
- Directional drilling and completion services
- Rig moving, transportation, and setup
- Equipment rental and leasing for drilling and production
- Geophysical, wireline, and other field support services
Owners, operators, and contractors who use or are responsible for drilling rigs, workover rigs, coiled tubing units, and related equipment may all need some form of this coverage, depending on contracts and local requirements.
What It Typically Covers
Coverage can be tailored to the specific operations and equipment you use, but policies for oil and gas drilling rigs and equipment commonly include:
- Physical damage to rigs and equipment – Coverage for covered causes of loss such as fire, explosion, collision, certain weather events, and other accidental damage to owned or scheduled rigs, masts, substructures, pumps, and key components.
- Contractors’ equipment coverage – Protection for mobile machinery, tools, and support equipment used in drilling and well servicing operations, on-site and sometimes in transit.
- Inland marine coverage – For equipment that is frequently moved between locations, stored off-site, or transported over land.
- General liability – Third-party bodily injury and property damage claims arising out of covered operations, subject to policy terms.
- Pollution liability (when added) – Limited or broader coverage for certain sudden and accidental pollution events, if endorsed or written as a separate policy.
Policies are often customized with schedules of equipment, endorsements, and limits that reflect the value of your property and the scope of your work.
Common Exclusions and Limitations
Like most commercial insurance, oil and gas drilling rigs and equipment policies include exclusions and limitations. These can vary by insurer and state, but often include:
- Normal wear and tear, corrosion, and gradual deterioration
- Mechanical or electrical breakdown not caused by a covered peril
- Intentional damage or dishonest acts
- Contractual liabilities beyond those imposed by law
- Certain pollution events or long-term environmental claims
- Fines, penalties, and some government-ordered cleanup costs
Some risks may be insurable only through separate policies or endorsements. Always review your policy documents and discuss specific exclusions and limitations with a licensed insurance professional.
Factors That Influence Cost
The cost of oil and gas drilling rigs and equipment insurance depends on several factors, including:
- Type and value of equipment – Higher-value rigs and specialized units typically require higher limits.
- Scope of operations – Onshore vs. offshore work, depth of wells, and types of services provided can affect risk.
- Location and territory – Operating areas, weather exposure, and regional legal environments can play a role.
- Claims history – Past losses, safety performance, and risk management practices are often considered.
- Coverage limits and deductibles – Higher limits and lower deductibles usually lead to higher premiums.
- Contract requirements – Additional insured endorsements, waivers of subrogation, and other terms may influence pricing.
Because each operation is different, insurers typically review detailed information about your equipment, procedures, and experience before offering terms.
Proof of Insurance and Compliance
Many oil and gas operators, contractors, and vendors must provide proof of insurance to work on a lease, platform, or project. This is often done through:
- Certificates of insurance showing active policies, limits, and key endorsements
- Copies of additional insured and waiver of subrogation endorsements when required by contract
- Updated policy information when equipment values or operations change
Requirements can vary by state, operator, and contract. Maintaining accurate schedules of rigs and equipment, along with current certificates, helps demonstrate compliance with many contractual insurance obligations.
How to Get a Quote
To request a quote for oil and gas drilling rigs and equipment insurance, gather details about your operations, including equipment lists, values, locations, and prior loss history. Then share this information with an insurance professional who understands the energy sector.
To get started, you can request a quote online: Get a quote.
Frequently Asked Questions
Do I need separate policies for my drilling rigs and my support equipment?
In many cases, rigs and support equipment can be insured under the same program, but they may be scheduled differently or covered under separate forms, such as rig physical damage and contractors’ equipment. How they are insured depends on your operations and insurer requirements.
Is my equipment covered while it is being moved between locations?
Coverage for equipment in transit is not automatic under every policy. Inland marine or contractors’ equipment coverage is often used to insure rigs and machinery while they are being transported, subject to policy terms and limits.
Are downhole tools and equipment covered?
Some policies offer limited coverage for certain tools and equipment while downhole, while others exclude this exposure or require a specific endorsement. Review your policy language to see how downhole risks are handled.
Does this insurance cover pollution from a blowout or spill?
Standard property or general liability forms may provide only limited or no coverage for pollution. Broader pollution coverage, including blowout and seepage, often requires separate policies or endorsements and is subject to specific terms and conditions.
How often should I update my equipment schedule?
It is generally recommended to update your equipment schedule whenever you add, sell, or significantly modify rigs or major equipment, and at least annually at renewal. Keeping schedules current helps avoid coverage gaps and valuation issues at claim time.
Still have questions? Talk to a local insurance expert.