What Triggers a Control of Well Event Coverage Instead of Equipment Failure?

If you are choosing insurance coverage for your oil operation in Pearland, TX, you may be unsure whether you need control of well coverage or a standard equipment failure policy. Barry Insurance Group can help you understand what each type of protection covers and how they differ.

What Is Control of Well Event Coverage?

Control of well coverage, also known as Operators’ Extra Expense or Energy Exploration and Development coverage, is a specialized insurance policy that protects oil and gas companies from the extremely high costs associated with a well blowout or loss of control. This type of coverage typically includes expenses related to regaining control of the well, such as firefighting, well-killing services, and capping or stacking operations.

Control of well coverage may also include costs for redrilling and well restoration, as well as cleanup and pollution mitigation expenses. Policyholders can add endorsements to expand their protection. Common options include Care, Custody, and Control coverage for third-party equipment, reimbursement for costs needed to secure wells, underground control coverage, and evacuation expense coverage.

When Equipment Failure Coverage Applies

Equipment failure incidents are usually covered under property or inland marine policies. This type of coverage applies when the issue is limited to the mechanical or physical integrity of the well equipment. In these cases, the well itself remains stable and is not in a blowout or uncontrolled flow state.

Equipment failure may occur due to normal wear and tear, operator mistakes, or a manufacturing defect. For example, if machinery fails but the well is not flowing uncontrollably, the appropriate coverage would typically fall under equipment failure, not control of well coverage.

Operators with extensive oil and gas operations should consider carrying both types of insurance to ensure full protection. Barry Insurance Group can help you select a control-of-well policy and review additional coverage options that support your operation. Contact our office serving Pearland, TX, and nearby communities to get started.