In oil and gas exploration and production, the Master Service Agreement (MSA) governs the ongoing relationship between operators and their service contractors. The insurance exhibit within the MSA defines what coverage each contractor must carry. These requirements are among the most extensive in any industry - reflecting the catastrophic loss potential of upstream operations.
Here's what a standard upstream MSA insurance exhibit looks like and how to verify compliance.
What an MSA Insurance Exhibit Contains
The MSA insurance exhibit (sometimes called the insurance schedule or Exhibit B) typically includes:
- A table of required coverage types and minimum limits
- Requirements for additional insured, waiver of subrogation, and primary/non-contributory status
- Specifications for the carrier quality (A.M. Best rating, typically A- or A, Class VII or higher)
- Language about how the contractual liability provisions interact with the insurance requirements
- The knock-for-knock and consequential damages waiver provisions
- Specific endorsement requirements by coverage line
The complexity varies by operator. Majors and large independents have highly detailed exhibits. Smaller operators may use simpler language, but the core coverage types are consistent.
Standard Coverage Types Required
Commercial General Liability: $1M-$5M per occurrence, $2M-$10M aggregate for most service contractors. Operators named as additional insured on an ongoing and completed operations basis. Primary and non-contributory. Waiver of subrogation.
Workers' Compensation / Employer's Liability: Statutory WC in all applicable states. Employer's liability $1M each accident/disease/aggregate. Waiver of subrogation required. For contractors working in offshore or maritime environments, USL&H (United States Longshoremen's and Harbor Workers') and Jones Act coverage may be required.
Commercial Auto: $1M-$5M combined single limit. Any auto coverage. AI and WOS where required.
Umbrella / Excess: $25M-$100M is common for primary service contractors. Higher limits ($100M-$300M) for well service, well completion, and operators in high-consequence operating areas. The umbrella must follow form over GL, WC, and auto.
Pollution Liability: $5M-$25M or higher for contractors with environmental exposure - pipeline work, tank cleaning, production chemical handling, land remediation. Separate from GL pollution exclusions.
Control of Well (COW): Required for well service contractors, completions crews, production workover contractors, and others who physically work on or near wellheads. Limits typically $5M-$25M. Covers costs of blowouts, wild well control, debris removal, and redrilling expenses.
Professional Liability / E&O: Required for engineering, inspection, consulting, and any service with a professional component. $1M-$10M depending on scope.
Operator's Extra Expense (OEE) / Energy Package: Some operators require contractors to carry their own OEE coverage for specific high-risk operations.
Typical Limits for Upstream Operators
Requirements scale with contractor tier and work type:
| Contractor Type | GL | Umbrella | Pollution | COW |
|---|---|---|---|---|
| Site services (low risk) | $1M/$2M | $10M | N/A | N/A |
| Field services (medium risk) | $2M/$4M | $25M | $5M | N/A |
| Well services / completions | $5M/$10M | $100M | $10M | $25M |
| Drilling contractors | $5M/$10M | $100M-$300M | $10M | $25M+ |
These are illustrative ranges. Your specific MSA requirements control.
Special Provisions: Knock-for-Knock
The knock-for-knock provision is standard in oil and gas MSAs and interacts directly with insurance requirements. Under knock-for-knock:
- Each party bears their own property losses and personnel injuries, regardless of fault
- The operator bears losses to operator property and operator personnel
- The contractor bears losses to contractor property and contractor personnel
The insurance exhibit is designed around this allocation: the contractor's WC covers contractor employees regardless of operator negligence; the contractor's property coverage covers contractor equipment regardless of fault.
This means the contractor's insurance requirements are structured to cover their portion of knock-for-knock losses, not the operator's. Understanding this structure is essential for correctly interpreting MSA insurance exhibits - particularly when considering whether waiver of subrogation provisions interact with the knock-for-knock framework.
Consequential Damage Waivers
Most upstream MSAs include mutual waivers of consequential damages - each party waives claims against the other for lost production, lost revenue, loss of well, and reservoir damage above the amounts specifically allocated in the contract.
These waivers limit the upside of liability claims but don't eliminate the need for adequate insurance. A significant control-of-well incident can have first-party costs (well kill, debris removal, redrilling) in the tens of millions even with a consequential damages waiver in place.
How to Verify MSA Compliance
MSA compliance is more demanding than standard COI verification because:
- Requirements vary significantly by contractor tier and work type
- Specialty coverages (COW, pollution, offshore) require carrier-specific verification
- Carriers writing upstream energy coverage are a smaller market - verifying carrier authorization and rating matters more
For each contractor, the verification process should:
- Extract the applicable requirements from the MSA insurance exhibit
- Compare submitted COI against those requirements line by line
- Verify specialty coverage terms (COW limits, pollution trigger, USL&H if applicable)
- Confirm AI and WOS endorsements are in place
- Verify carrier A.M. Best rating and state authorization
Automation for Large Contractor Pools
Large operators and midstream companies manage hundreds of contractors under MSAs with varying requirements. Manual verification at this scale is extremely labor-intensive. Automation handles:
- Storing MSA insurance requirements by contractor category
- Comparing submitted COIs against the applicable requirements automatically
- Flagging missing specialty coverages or below-minimum limits
- Tracking expiration dates and triggering renewal requests
The consequence of a compliance gap in upstream oil and gas isn't a fender bender - it's a well control event, an environmental incident, or a multi-fatality accident. The stakes make compliance infrastructure a business necessity.
Bramble handles COI verification for complex MSA requirements across large contractor pools. See how it works.