Top Mistakes New Oil Well Drilling Contractors Make And How to Avoid Them

Nate Jones, CPCU, ARM, CLCS, AU
6 days ago
2 min read

Starting an oil well drilling business is capital-intensive, high-risk, and heavily regulated. Many new drilling contractors enter the market with strong technical skills—but still make avoidable mistakes that cost them contracts, delay operations, or expose them to serious liability.

Below are the most common mistakes new oil well drilling contractors make—and how to avoid them before they impact your business.

1. Underestimating Contract Insurance Requirements

One of the biggest mistakes new drilling contractors make is assuming basic coverage is enough. Operators often require specific insurance language, limits, and endorsements before allowing work to begin.

Failing to meet these requirements can result in:

Contract delays
Lost drilling opportunities
Last-minute coverage scrambling

How to avoid it: Work with an insurance agency that understands oil well drilling contracts and operator-specific insurance requirements from day one.

2. Not Carrying the Right Liability Coverage

Oil well drilling carries unique risks, including well control incidents, subsurface damage, and environmental exposure. Many new contractors rely solely on general liability without addressing drilling-specific risks.

This gap can leave your business exposed during:

Well control events
Property damage claims
Third-party injury lawsuits

How to avoid it: Ensure your insurance program is designed specifically for drilling operations—not generic oilfield services.

3. Overlooking Equipment and Rig Protection

Drilling rigs, derricks, mud systems, and downhole tools represent major investments. New contractors sometimes delay insuring equipment to reduce startup expenses—only to face losses due to theft, fire, or mechanical failure.

How to avoid it: Secure coverage that protects owned and leased equipment before it ever reaches the wellsite.

4. Poor Safety Documentation and Compliance

Operators prioritize contractors with strong safety programs. New drilling companies often underestimate how safety records, training documentation, and insurance work together during the vetting process.

Without proper documentation, operators may view your business as high risk—even if your crew is experienced.

How to avoid it: Align your insurance, safety program, and compliance documentation to meet operator expectations from the start.

5. Choosing an Insurance Provider Without Industry Experience

Not all insurance agents understand oil well drilling. Working with a general commercial agent often leads to:

Coverage gaps
Denied certificates
Policy exclusions that don’t match drilling operations

How to avoid it: Partner with an agency that specializes in oil & gas insurance and works with carriers that insure drilling contractors nationwide.

How Wexford Insurance Helps Drilling Contractors Avoid These Mistakes

Wexford Insurance works exclusively with oil & gas businesses, including oil well drilling contractors across the U.S. We help ensure your insurance program: