Why Fuel Dealers & Distributors Need Specialized Insurance

Key Takeaways 

• Fuel dealers and distributors face high-severity risks including explosions, environmental damage, cyberattacks, and auto liability claims. 
• Standard commercial insurance policies often exclude or underinsure fuel-related exposures. 
• Specialized fuel dealer insurance programs provide industry-specific endorsements, higher liability limits, and excess coverage. 
• Cyber insurance and inland marine coverage are increasingly critical for propane and fuel operations. 
• Working with a specialty MGA ensures coverage aligns with the operational realities of the fuel sector. 

Fuel dealers and distributors play a critical role in ensuring society runs smoothly. Unfortunately, things can go wrong, resulting in disaster for both the fuel companies and the people and businesses who depend on them. When that happens, the right insurance coverage can help get dealers and distributors back on track as quickly as possible. Fuel dealers and distributors insurance must be specifically designed to address the high-risk exposures unique to propane, gasoline, and fuel transportation operations.

A Crucial Supply Chain

A cyberattack against the fuel sector can break down the supply chain and lead to widespread disruption. This became clear in 2021, when a cyberattack against Colonial Pipeline shut down the company’s digital systems for several days. According to TechTarget, it is one of the most vital oil pipelines in the U.S. The cyberattack led President Biden to declare a state of emergency, and NPR says panic ensued as people worried about gas shortages and price hikes.

This was a large-scale incident, but incidents involving smaller companies can also cause disruption. According to the International Energy Forum, the energy sector is a top target for cyberattacks. As the fuel industry becomes more technologically advanced, the risks increase. For example, Security Boulevard explains how a cyberattack could devastate U.S. gas stations.

The Stakes Are High for the Fuel Sector

Fuel is explosive by nature. Therefore, when things go wrong, they tend to go VERY wrong.

On June 11, 2023, a tanker truck carrying a petroleum-based product caught fire while underneath a the I-95 highway in Philadelphia. The fire caused a portion of the highway to collapse, which, according to CNN, could take months to repair. In the meantime, local commutes will be impacted. The Philadelphia Inquirer says it is still unclear how much the repairs will cost, but the Federal Highway Administration has approved $3 million in emergency funding and the governor has freed up $7 million in state resources to cover immediate costs. The incident also resulted in the death of the truck driver, according to CNN.

Fires and explosions are also a major concern for gas stations, with incidents causing serious injuries in addition to property damage. According to WPTV, a gas pump explosion near West Palm Beach resulted in the hospitalization of one person, whereas Valley News Live says a teen suffered severe burns from a gasoline explosion at a gas station in a small town in Minnesota. WFLA says a gas station explosion in Kansas resulted in the death of a young child and led to a woman being seriously injured. These are just a handful of the most recent incidents – gas station fires are distressingly common.

What Is Fuel Dealers and Distributors Insurance?

Fuel dealers and distributors insurance is a specialized commercial insurance program designed to protect businesses that store, transport, and sell propane, gasoline, diesel, and other fuel products. These programs address high-severity risks such as explosions, environmental contamination, transportation liability, and cyber threats. Unlike standard commercial policies, they include industry-specific endorsements and higher liability limits tailored to fuel operations.

Insurance Coverage for Fuel Companies

Since risks are substantial, insurance coverage needs to be robust.

If you’re operating a gas station, fuel dealership, or wholesale gasoline business, you need insurance coverage that meets your unique needs — including a specialized fuel and propane insurance program. Insurance programs not designed with your sector in mind might be unsuitable. For example, the limits might be too low to cover the high costs that are often associated with fuel-company incidents and the policy might exclude activities that are central to your business.

You need a comprehensive insurance product that caters to your business and includes the following:

• Workers’ Compensation: Employers in any industry need workers’ compensation coverage. However, the risks involved mean having a robust program that mitigates losses is especially important in the fuel sector.
• Industry-Specific Endorsements: Your general liability, auto insurance, and property insurance policies need to be written with your risks in mind. The addition of industry-specific endorsements and enhancements can provide the right coverage.
• Cyber Insurance: A ransomware attack, data breach, or other cyberattack could compromise your operations. Cyber insurance can help you cover the costs associated with responding to and recovering from an attack and help you minimize your downtime.
• Inland Marine Insurance: Inland marine insurance provides protection for products transported over land or warehoused by a third party. If you transport fuel products owned by another company, inland marine insurance will provide you with critical coverage.
• Excess Liability Insurance: Your standard liability insurance policies might not provide high enough limits to cover the costs associated with fuel-related incidents. Excess liability insurance can provide an extra layer of coverage.
• Environmental / Pollution Liability Insurance:
  Fuel spills, leaks, and contamination events can result in costly cleanup and regulatory action. Pollution liability coverage helps address environmental damage and third-party claims.

Some insurers won’t touch fuel-related risks. Others might be willing to offer insurance, but they may not provide coverage that meets the needs of the fuel sector.

Tangram Insurance Services offers a specialty insurance program exclusively for fuel and propane dealers and distributors. With deep expertise in complex P&C risks and high-hazard industries, Tangram’s underwriting approach is designed to address the real-world exposures fuel companies face — including excess liability capacity, industry-specific endorsements, and risk management support tailored to the sector.

Do Fuel Dealers Need Specialized Insurance?

Yes. Due to the explosive nature of fuel products, transportation risks, environmental exposures, and increasing cyber threats, fuel dealers and distributors require specialized insurance coverage designed specifically for the energy sector. Standard commercial policies often lack the limits and endorsements needed to properly protect these operations.

Learn more.