I live outside ND but own land and the minerals in ND. I recently traveled to my farm to see the pipeline and drilling activity that is taking place on my land. After returning home it dawned on me that I don't carry liability on the farm which is rented out. I began to ask myself questions reguarding any accidents and injuries that could happen on the farm and the potential lawsuits. I checked my oil leases and found nothing regarding liability for oil and pipeline workers. My insurance agent here (and is not licensed in ND) recommended I contact an agent in ND to sell me a Farm Liability policy.
Does anyone have any advice on the subject?
Thanks,
Terry
Terry:
If you are the surface owner, first you need to have a written agreement with the operator in regards to any surface damages which occur as a result of any accident related to the oilfield activity on the property. I would address in that agreement, the topic of surface owner liability in the event of a accidents and injuries resulting from these oilfield related activities. In the past, my experiences with accidents/injuries have been directly aimed at the operator or the drilling/service companies. I have never heard of a surface or mineral owner being brought into a lawsuit. Further, I will not say it hasn't happened but that is just my experience.
All of your lessees (oil & gas and farm) should be required to hold a general liability insurance policy, on which you should be named as an additional insured. You should be sent a certificate of insurance. The limit on the policy should be in keeping with the value of the property and the scope of any possible 3rd party liability claims. Lease terms should also indemnify the lessor and hold him harmless from any acts of negligence or liabilities that arise from lessees' activities.
Dear Mr. Keady,
In actual practice, unless he has entered into a Joint Operating Agreement with the Operator where the limits of insurance are spelled out, he is NOT covered by the general liability insurance and is not carried as an additional insured.
Firstly, if your farm is rented, then you must have a tenant and a written lease with a "strong" Idemnification Clause.
No? Then hire a darn good attorney to implement one that idemnifies you (and all concerned) from everything imaginable and have your tenant sign and incorporate it into the lease. The tenant's cow could fatally step into a hole or his crop could fail or something the Operator did that took on an adverse effect for the tenant ... whatever! It could turn into a liability issue.
P.S. Besides having a "strong" Idemnification Clause in a farm lease, farm liability insurance can be added to the Homeowner's policy. And/or you may want to require the tenant to purchase liability insurance and make you an additional insured under the policy. (I live in Texas.)
Thank you.
Pat
I am in a similar circumstance. I owned a small parcel of land which has a well on it. I am having a very difficult time finding an insurance company which will write me an umbrella policy for the land outside of the area I have leased to the oil company. Can anyone recommend an insurance company which will right such a policy, I was told Travelers, my current insurance provider will not touch it.
My Homeowner's is written by Traveler's. The home is 150 miles from the farm. Since Travelers knew we had a farm, it was they who suggested that we include a "strong" liability clause for the farm. We didn't offer information that the land had a lease on it, and we didn't offer that there is an easement running through it with a pipeline within that easement. And, they didn't ask. A different carrier insures the farm.
Good luck,
Pat
Richard Odekirk said:
I am in a similar circumstance. I owned a small parcel of land which has a well on it. I am having a very difficult time finding an insurance company which will write me an umbrella policy for the land outside of the area I have leased to the oil company. Can anyone recommend an insurance company which will right such a policy, I was told Travelers, my current insurance provider will not touch it.
Hello Pat;
I talked to Travelers just yesterday and the gentleman I spoke with was fabulous and very knowledgeable. That's the good news. The bad news is that Travelers has a line of insurance products specifically for oil and gas wells but it is for the production companies and not for the land owners. The agent reviewed my situation with me at length and said that that my homeowners wouldn't cover anything to do with my farm and that Travelers could not offer a policy to cover it. I have been shopping around and found Allied will write an umbrella policy for 1 million but they want $3,500 a year to cover the place. That is even with the well site excluded.
Hmmm! What a bummer.
Note: Since our Traveler's agent had become unresponsive to our coverage needs, I decided to search for a new agent. A few phone calls and questions later, I found another Traveler's agent who offered us better coverage for less $$. And, this is the agent who suggested that the Homeowner's policy carry a "farm liability" provision. That was three years ago.
So, see, it was just a matter of changing agencies.
Also, you might want to check with some of the smaller agencies near your farm.
Good luck,
Pat
Richard Odekirk said:
Hello Pat;
I talked to Travelers just yesterday and the gentleman I spoke with was fabulous and very knowledgeable. That's the good news. The bad news is that Travelers has a line of insurance products specifically for oil and gas wells but it is for the production companies and not for the land owners. The agent reviewed my situation with me at length and said that that my homeowners wouldn't cover anything to do with my farm and that Travelers could not offer a policy to cover it. I have been shopping around and found Allied will write an umbrella policy for 1 million but they want $3,500 a year to cover the place. That is even with the well site excluded.
I have looked diligently for any case where a landowner was held liable for personal injuries arising out of oil and gas operations, and I cannot find one in any state. In theory, the landowner does have some premises liability, but the rule establishing landlord liability is devoured by the exceptions. The oilfield employees entering the property subject themselves to oilfield risks which are open and obvious. Non-oilfield parties injured on farms would be barred by North Dakota's Recreational Immunity statutes.
There are certain legal liabilities, particularly environmental ones, that a mineral lessor could theoretically be saddled with. Practically though, tort claims against owners of mineral rights or mineral lands are extremely rare. Any mineral owner insurance policy should have a premium that reflects the remoteness of the mineral owner's chances of liability.
I should add to my last statement that a properly drafted indemnity clause or agreement with the operator should be more than adequate as long as the operator's solvency isn't a concern. In that case, or in general, you can condition the grant of any future lease on the company adding you as a named insured on their general liability insurance.