An oil and gas MSA insurance exhibit is not a formality. It is the legal foundation of the operator's risk transfer strategy - the document that determines whether contractor insurance actually responds when an incident occurs.
Weak MSA insurance language is one of the most common sources of uninsured exposure in the oilfield. "Adequate insurance" is not a standard. "Insurance satisfactory to Company" is not enforceable. "Coverage types and limits as required by applicable law" fails to capture the oilfield-specific coverages that state law does not require.
A well-drafted MSA insurance exhibit specifies every required coverage type, every minimum limit, every required endorsement, and every special provision needed to close the coverage chain between the contractor's incident and the operator's recovery.
What Every Oil & Gas MSA Insurance Exhibit Must Include
Mandatory Coverage List with Specific Limits
Every required coverage type must be listed with explicit minimum limits. Avoid language like "appropriate" or "industry standard" - these are not verifiable standards and will not hold in a dispute.
| Coverage Type | Example Exhibit Language |
|---|---|
| General Liability | "Commercial General Liability insurance with limits of not less than $2,000,000 per occurrence and $4,000,000 in the aggregate" |
| Auto Liability | "Business Automobile Liability insurance covering all owned, hired, and non-owned vehicles with limits of not less than $1,000,000 combined single limit per accident" |
| Workers' Compensation | "Workers' Compensation insurance in accordance with the statutory requirements of all states in which Contractor performs work hereunder" |
| Employers' Liability | "Employers' Liability insurance with limits of not less than $1,000,000 per occurrence/$1,000,000 aggregate/$1,000,000 per employee" |
| Pollution Liability | "Contractor's Pollution Liability insurance with limits of not less than $2,000,000 per occurrence, covering claims arising from pollution conditions caused by Contractor's operations" |
| Umbrella / Excess | "Umbrella/Excess Liability insurance with limits of not less than $10,000,000 per occurrence and $10,000,000 aggregate, following form over the Commercial General Liability, Business Automobile Liability, and Employers' Liability policies" |
| Control of Well | "Control of Well insurance with limits of not less than $5,000,000, covering blowout, wild well, and related re-drilling costs and cleanup expenses" |
Scope-Based Limit Variations
A single fixed limit schedule is inadequate for the range of contractor scopes in oilfield operations. The exhibit should account for scope-specific risk:
Subsurface and well operations (drilling, completions, workover): Higher umbrella ($10M-$25M), control of well required, pollution at $2M+.
Pipeline and facility construction: GL at $2M+ with XCU removal required, pollution for excavation risks, builders risk for major installations.
Professional and technical services (engineering, consulting): Professional liability / E&O required at $1M-$5M, in addition to standard GL.
Support services (catering, administrative): Reduced requirements acceptable; typically GL $1M/$2M, auto, WC. No pollution or control of well required.
Endorsement Requirements
Endorsements must be listed explicitly in the exhibit. Do not assume they are required - courts have held that endorsement requirements must be specifically stated to be enforceable.
Additional Insured Language: "Contractor shall cause Company [and its parents, subsidiaries, affiliates, joint venture partners, and their respective officers, directors, and employees] to be named as Additional Insureds on the Commercial General Liability, Business Automobile Liability, Umbrella/Excess Liability, and Contractor's Pollution Liability policies. Such Additional Insured status shall be provided on a primary and non-contributory basis with respect to any other insurance or self-insurance maintained by Company."
Why "primary and non-contributory" matters: Without this language, when a claim involves both the contractor's and operator's insurance, the insurers may attempt to share responsibility proportionally - reducing the protection additional insured status provides. Primary/noncontributory language requires the contractor's policy to respond first, in full.
Waiver of Subrogation: "All policies required hereunder shall include a waiver of subrogation in favor of Company and its parents, subsidiaries, affiliates, and joint venture partners."
Without this provision, the contractor's insurer can pursue recovery against the operator after paying a claim - defeating the mutual indemnification structure of the MSA.
XCU Exclusion Removal: "The Commercial General Liability policy shall not include exclusions for explosion hazard, collapse hazard, or underground damage."
This provision should be explicit because XCU exclusions are a standard policy feature that must be affirmatively removed. Simply requiring GL coverage without this language often results in XCU exclusions remaining in place.
Cancellation Notice: "Contractor shall provide Company with at least 30 days' prior written notice of any cancellation, material modification, or non-renewal of any policy required hereunder."
Verify with contractors that their policies actually include 30-day notice provisions - many standard policies provide only 10 days for non-payment cancellations.
Anti-Indemnity Statutes: The Interaction with Insurance Requirements
Many oil-producing states have anti-indemnity statutes that limit or void broad-form indemnity provisions in oilfield contracts. These statutes affect how MSA insurance requirements function:
Texas: The Texas Oilfield Anti-Indemnity Act voids contractual indemnity provisions that require a party to indemnify another for the indemnitee's own negligence - unless both parties carry mutually required insurance covering that indemnity.
The practical implication: if your MSA requires mutual indemnification and requires each party to be additional insured on the other's policies, the insurance requirements must actually be met for the indemnification structure to be enforceable. An operator whose contractor is underinsured may find the MSA's indemnification provisions partially or fully void under anti-indemnity law.
Other affected states: Louisiana, New Mexico, Wyoming, Montana, and others have similar provisions. Operators with multi-state assets should have MSA insurance exhibits reviewed by counsel familiar with each relevant state's anti-indemnity law.
Certificate Requirements in the Exhibit
The exhibit should define the mechanics of COI submission:
"Prior to commencement of work, and no later than [30] days prior to each policy renewal, Contractor shall provide Company with Certificates of Insurance evidencing the coverages required herein. Such certificates shall name Company as certificate holder, confirm Additional Insured and Waiver of Subrogation status on each applicable policy, and shall be submitted directly by Contractor's insurance broker or insurer."
Frequently Asked Questions
How often should the MSA insurance exhibit be updated? At minimum every 3-5 years, or whenever the operator's risk profile changes materially - new asset types, entry into new jurisdictions, or significant changes in contractor scope. Exhibits drafted 10+ years ago frequently reference limits that are materially inadequate given current loss experience.
Should umbrella requirements specify which underlying policies the umbrella follows form over? Yes. Generic umbrella requirements often result in umbrellas that follow form over GL and auto but not over employers' liability or pollution. The exhibit should specify that the umbrella must follow form over all required underlying policies.
What happens if a contractor can't meet the MSA insurance requirements? The operator has several options: waive the requirement (documented, risk-accepted), require the contractor to cure the gap before work begins, or accept the contractor but retain a higher portion of the risk contractually. Most risk managers prefer requiring cure - but for specialty contractors or limited scopes of work, documented waivers are sometimes appropriate.
Can I require specific policy forms in the MSA? Yes. Operators can specify occurrence form requirements (particularly for pollution coverage), minimum AM Best ratings for insurers, and prohibition on specific exclusions. These requirements must be practical - requiring policies that don't exist in the market creates enforcement problems - but reasonable form specifications are standard in upstream MSAs.
The oil and gas MSA insurance exhibit is the single most important document in a contractor compliance program. Weak language produces weak protection, regardless of how diligently COIs are collected.
See how Bramble compares contractor COIs against your MSA requirements or learn how contract vs. COI comparison works.
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