Common Mistakes New Oilfield Contractors Make And How to Avoid Them
- Nate Jones, CPCU, ARM, CLCS, AU
- 6 days ago
- 2 min read
Starting an oilfield contracting business can be extremely profitable—but it’s also one of the most high-risk industries in the U.S. Every year, new oilfield contractors lose contracts, face shutdowns, or suffer major financial losses due to avoidable mistakes.
Understanding these common pitfalls can help you build a stronger, more profitable operation from day one. At Wexford Insurance, we work with oilfield contractors nationwide to help them avoid insurance-related mistakes that stall growth or derail businesses entirely.
Mistake #1: Underestimating Insurance Requirements
One of the biggest mistakes new oilfield contractors make is assuming basic business insurance is enough. Oil & gas operators typically require:
Pollution Liability Insurance
Without the proper coverage and endorsements, contractors may be denied vendor approval or removed from job sites.
Mistake #2: Buying the Cheapest Policy Available
New contractors often focus solely on price. While controlling costs is important, cheap policies may exclude critical coverages like:
Equipment damage
Environmental incidents
Employee injuries in high-risk zones
Low-quality coverage can leave contractors paying out of pocket for claims that could otherwise be insured.
Working with an agency that specializes in oil & gas—like Wexford Insurance—helps ensure coverage is designed for real-world oilfield risks.
Mistake #3: Ignoring Safety & Compliance Programs
Safety isn’t optional in oilfield operations. Operators closely monitor safety performance, and poor records can lead to lost contracts.
According to OSHA, oil & gas work environments require strict adherence to safety standards, training, and documentation.
Common oversights include:
No written safety manual
Lack of Job Safety Analysis (JSA) procedures
Inadequate training documentation
Strong safety programs reduce injuries, lower insurance costs, and improve contractor credibility.
Many new contractors lose work simply because insurance certificates expire or don’t meet operator wording requirements. Missing an Additional Insured endorsement or Waiver of Subrogation can lead to immediate suspension from approved vendor lists.
Wexford Insurance helps manage certificates and renewals proactively—so compliance issues don’t interrupt operations.
Mistake #5: Growing Too Fast Without Risk Planning
Rapid growth is exciting, but it can expose contractors to major risks if insurance doesn’t scale properly. Adding crews, trucks, or equipment without updating coverage leaves dangerous gaps.
As your business grows, your insurance should evolve with it.
How to Avoid These Mistakes
The fastest way to avoid costly errors is partnering with an insurance agency that understands oil & gas operations. Wexford Insurance works with carriers that insure oilfield contractors across the nation—helping you stay compliant, protected, and competitive.
