Control Of Well Insurance (COW)

918,068

Total Producing Wells (2023)

589

Active Drilling Rigs (Dec 2024)

9,779

Drilling Permits Approved (2021-2024)

12.9M

Barrels/Day Production (2023)

Coverage A: Cost of Well Control

Covers expenses to bring an out-of-control well under control, including:

• Specialized control services (Wild Well Control, Cudd services)
• Equipment and materials for control efforts
• Emergency response and evacuation costs
• Well capping or plugging expenses

Coverage B: Redrilling & Restoration

Covers costs to restore or replace the well:

• Well bore restoration expenses
• Redrilling costs (up to specified percentages)
• Replacement well drilling
• Site preparation and cleanup

Coverage C: Seepage & Pollution

Covers third-party pollution cleanup and containment. For operations requiring standalone pollution liability insurance, CVI offers that separately as well.

• Surface contamination cleanup
• Third-party property damage
• Prevention and containment costs
• Above-ground seepage remediation

Care, Custody & Control (CCC)

Covers third-party contractor equipment and supplies:

• Contractors’ on-site equipment (owned or rented)
• Surface and downhole supplies
• Pipes, tools, and drilling materials
• Rig replacement costs (when transferred via contract)

What’s Typically Excluded:

• Underground Reservoirs: Damage to oil and gas reservoirs and reservoir pressure
• Property Damage: First-party property losses (covered by separate property insurance)
• Business Interruption: Lost production and delayed development costs
• Bodily Injury: Employee injuries (covered by workers’ compensation and general liability)
• Subsurface Water/Minerals: Underground contamination damage

Critical Policy Triggers:

• “Out of Control” Definition: Insurers may dispute whether a well was actually “out of control”
• Time Limitations: Coverage may terminate if recovery efforts don’t commence within specified timeframes
• “Most Prudent and Economical Methods”: Insurers may challenge reimbursable costs if not deemed necessary
• Policy Period: Incidents must occur during the active policy period

Standard Coverage Limits

• Small Operations: $1M – $5M total limits
• Mid-Size Operations: $5M – $15M total limits
• Large Operations: $15M – $35M total limits
• Major Offshore: $35M+ total limits

Limits typically calculated as 3-5 times the dry-hole AFE (Authority for Expenditure)

Typical Premium Ranges

• Small Wells: $97-$159/month
• Standard Policies: $5,500+ annual premium
• Large Operations: $50K-$500K+ per well
• CCC Sublimits: $500K-$1M typical

Pricing varies by location, depth, well type, and risk factors

Average Claim Scenarios

• Well Control Efforts: $3M-$6M (1-2x dry-hole costs)
• Redrilling/Restoration: $4.5M (for $3M dry-hole well)
• Seepage & Pollution: $1M-$2M additional coverage needed
• Total Exposure: $9M-$13M for 13,500′ well

The United States now produces more crude oil than any nation at any time in history!

Leading global production for six consecutive years (2018-2023) — via EIA Petroleum Production Data

Typical Contractor Requirements

• General Liability: $1M per occurrence / $2M aggregate minimum
• Control of Well: Varies by project size and depth
• Joint Operating Agreements: Often require $1M+ coverage with shared excess costs
• Umbrella Coverage: Additional protection above policy limits
• Equipment Coverage: Including rig replacement cost endorsements

State Agency & Regulatory Endorsements

• Gradual Pollution Coverage: Often required for environmental compliance — see our pollution liability page for details
• Additional Insured Status: For state agencies and surface owners
• Primary and Non-Contributory: Ensuring primary coverage responsibility
• Waiver of Subrogation: Protecting contractual relationships
• Notice Requirements: Specific notification procedures for claims

Requirements vary by state and specific project locations. Always consult with your insurance professional for current regulatory requirements.

What is the difference between OEE and CCC coverage?

OEE (Operators Extra Expense) covers your own costs to regain control of the well — control efforts, redrilling, and seepage cleanup. CCC (Care, Custody and Control) covers damage to third-party contractor equipment — drilling rigs, downhole tools, surface equipment — that is in your care at the time of the incident. Both are typically written together but carry separate limits and deductibles. Getting the CCC limit right is critical; a rig day rate of $25,000–$50,000 adds up fast.

Is control of well insurance required by law?

Requirements vary by state. The Texas Railroad Commission, Oklahoma Corporation Commission, Wyoming Oil and Gas Conservation Commission, and New Mexico Oil Conservation Division all impose financial responsibility requirements on operators. Additionally, most joint operating agreements (JOAs) and drilling contracts independently require specified limits of well control coverage. CVI is licensed in TX, OK, WY, NM, AK, CA, NV, ND, and PA — contact us for state-specific guidance.

What does well depth have to do with my premium?

Well depth is one of the primary rating factors for control of well insurance. Underwriters use depth bands — typically 0–5,000 ft, 5,001–7,500 ft, 7,501–10,000 ft, 10,001–15,000 ft, and 15,001–20,000 ft — to assess the complexity and cost of a potential well control event. Deeper wells require more specialized equipment and expertise to bring under control, which drives higher premiums and often higher deductibles.

Can I get control of well coverage for a single well or a drilling program?

Yes to both. CVI can place coverage on a single well basis (ideal for operators with occasional drilling activity) or on an annual blanket program basis for operators with ongoing or multi-well drilling programs. Blanket programs typically provide better per-well economics and eliminate the need to bind coverage well-by-well. Call us at (818) 974-8117 to discuss the right structure for your operation.

Who are the main carriers for control of well insurance?

Control of well insurance is a surplus lines specialty — standard admitted carriers typically won’t write it. The market is dominated by Lloyd’s of London syndicates and a handful of domestic surplus lines carriers with dedicated energy units. CVI works with these specialized markets to place coverage that standard brokers often cannot access. For a full overview of the market and what underwriters look for, download our Control of Well white paper.

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