Oil & Gas Insurance: What New Mexico Companies Miss That Can Cost Millions
Oil and gas operations in New Mexico operate on a scale where small oversights, such as a contract dispute, can turn into seven-figure losses overnight. Yet many operators assume they are fully protected because they carry general liability, property insurance, and workers’ compensation. But they may not be if they don’t have oil and gas insurance.
A common question among operators after a denied claim is: What insurance coverage do oil and gas companies in New Mexico often overlook? The answer is oil and gas insurance – because it’s a policy that can fill in the gaps in coverage sometimes created by exclusions, contract mismatches, and policies not designed for oilfield realities.
This is, after all, an industry with complex regulatory, environmental, and operational risks. Your insurance should meet the moment.
Why Standard Coverage Falls Short in New Mexico’s Oil and Gas Industry
General liability and property insurance are not built for oilfield operations. Those policies are designed for offices, warehouses, and traditional businesses, not remote drilling sites, produced water handling, or heavy mobile equipment. The oil and gas industry can be a dangerous business, so much so that the federal government keeps a database of fatalities in the oil and gas extraction industry.
New Mexico presents additional challenges for workers in the industry. Many operations take place in remote locations, with delayed emergency response times. Water disposal and produced fluids increase environmental exposure. Seismic activity concerns tied to wastewater injection have intensified regulatory scrutiny.
Policies written without oil and gas expertise often contain pollution exclusions and restrictive definitions. When coverage is placed without understanding these factors, operators discover limitations only after a loss.
What High-Cost Risks Are New Mexico Oil and Gas Companies Most Likely To Miss?
Why was my claim denied? What went wrong?
Having a claim not work out isn’t a pleasant experience for anyone. That’s why you want to be proactive and make sure your insurance is properly structured before something goes wrong.
Some of the most expensive insurance gaps involve exposures operators assume are covered.
Pollution Liability
Many policies only address sudden and accidental releases, leaving no protection for gradual contamination. Cleanup costs, third-party claims, and regulatory fines can escalate quickly when coverage stops at the wrong definition.
Contractual Liability
Master service agreements often require operators to assume liability they have not insured. When a contract shifts responsibility but the policy does not follow, the operator absorbs the loss.
Equipment Issues
Mobile equipment may be undervalued, resulting in lower payouts after a loss. Leased or rented rigs and machinery may have limited or no coverage unless specifically scheduled. These gaps often surface only after damage, theft, or total loss.
How Contract Language and Insurance Mismatches Create Million-Dollar Losses
Indemnification clauses, additional insured requirements, and subrogation waivers must align with the insurance policies. In practice, they may not. Certificates of insurance may show compliance, but certificates do not modify coverage.
When contract terms exceed policy language, insurers can deny claims that operators believed were transferred to another party. Reviewing contracts separately from insurance policies creates exposure that no endorsement can fix after the fact. Contracts and insurance must be reviewed together to avoid catastrophic surprises.
How the Right Oil & Gas Insurance Strategy Protects New Mexico Operators Long-Term
The largest oilfield losses don’t always come from dramatic blowouts. They can come from overlooked details buried in exclusions, definitions, and contracts. A strong insurance strategy anticipates these issues before they surface.
Working with an advisor who understands oilfield operations and New Mexico regulations helps operators close gaps before losses occur. Layered protection, including tools such as commercial umbrella coverage, can provide additional financial protection when primary limits are exhausted.
To review your current oil and gas insurance strategy and identify potential gaps, contact a local Daniels Insurance advisor today.
About Daniels Insurance
At Daniels Insurance, Inc., we have a unique understanding of the risks that businesses like yours face on a regular basis. With the backing of our comprehensive coverages and our dedication to customer service and quick claims resolution, your business will be fully protected. For more information, contact us today at (855) 565-7616.