What energy insurance covers
Energy insurance is a family of specialty covers for companies that explore for, produce, transport, refine and generate energy. It is usually divided into upstream (exploration and production, onshore and offshore), midstream (pipelines, terminals and storage), downstream (refineries and petrochemical plants) and power and renewables (conventional plants, wind, solar and battery storage). Large risks are shared by many insurers and reinsurers worldwide. According to the IUMI Stats Report 2025, global offshore energy premiums fell 7.9% to about $4.34 billion in 2024, and London still writes roughly 60% of that business.
Main coverage types
- Physical damage: platforms, rigs, production vessels, pipelines, plants, turbines and panels, usually on an all-risks basis.
- Control of well: also called operators' extra expense. The widely used Lloyd's market wording EED 8/86, revised by the Lloyd's Market Association in November 2025, has three sections: regaining control of a well (A), restoration and redrilling (B) and seepage, pollution and clean-up (C).
- Business interruption: loss of production income or gross profit after a covered physical loss, subject to a waiting period.
- Third-party liability: bodily injury, property damage and pollution claims, often in a separate excess liability tower.
- Construction: offshore construction all risks and onshore CAR/EAR for new platforms, pipelines, plants and wind farms.
US financial responsibility rules
Some energy coverage is effectively mandatory. Under the Oil Pollution Act rules administered by the Bureau of Ocean Energy Management in 30 CFR Part 553, a responsible party for a covered offshore facility on the Outer Continental Shelf must demonstrate oil spill financial responsibility of $35 million to $150 million, depending on the worst-case discharge volume. Facilities outside the OCS start at $10 million. The regulation also states the liability limit for offshore facilities as all removal costs plus about $167.8 million in damages per incident. Insurance is one accepted way to meet the requirement. State rules for onshore wells, pipelines and power plants vary, and lenders and partners usually set their own minimums.
Common exclusions
- Wear and tear, corrosion, gradual deterioration and inherent defects.
- Gradual or long-term pollution, as opposed to sudden and accidental events.
- War, terrorism and sabotage unless bought back under separate cover.
- Cyber events, which many energy wordings exclude or sublimit.
- Reservoir and underground losses unless specifically endorsed.
Offshore cover in hurricane areas such as the Gulf of Mexico often carries a named windstorm sublimit or a higher deductible.
What drives the price
- Asset type, age, maintenance and engineering survey results.
- For wells: depth, pressure and temperature, location and the drilling contractor's record.
- Exposure to windstorm, flood and earthquake.
- Loss history of the insured and of the sector worldwide.
- Available market capacity, which changes with oil prices, sanctions and insurers' appetite.
How claims work
Energy losses are handled by specialist adjusters, engineers and well-control experts. Notify the lead insurer immediately, follow its instructions on emergency response, and document every cost. Contracts matter as much as the policy: drilling and service contracts often use reciprocal knock-for-knock indemnities, under which each party bears losses to its own people and property regardless of fault, and insurers will follow those allocations.
How to choose an energy program
Work from a schedule of assets and wells, a realistic estimate of well control and pollution costs, and the indemnity terms in your contracts. Compare not only price but lead insurer expertise, claims capability and security. For very large exposures, see our page on energy reinsurance, and for site liability, general liability. Polis Re helps you compare insurers and request quotes for energy risks in the US and international markets through a single request.
