Fuel and Propane Claims: 4 Scenarios to Avoid

Risks in the fuel and propane sector can be explosive – is your company protected? Watch out for common fuel and propane claims and learn how to avoid problems.

Key Takeaways 

• Fuel and propane companies face high-severity claims involving explosions, bodily injury, cyberattacks, and crime. 
• Transportation-related losses can exceed standard commercial auto limits without excess liability coverage. 
• Cyberattacks and social engineering are growing risks for fuel distributors and gas stations. 
• Risk management protocols and specialized fuel insurance programs work together to reduce claim severity. 
• Reviewing liability limits and industry-specific endorsements is critical for long-term protection.
  

Fuel and propane insurance claims can be financially devastating, especially when businesses lack specialized coverage designed for high-hazard operations.

What Are the Most Common Fuel and Propane Insurance Claims?

The most common fuel and propane insurance claims involve transportation accidents, explosions, severe bodily injury, cyberattacks, and property crime. Due to the combustible nature of fuel products and the regulatory environment surrounding storage and transport, claim severity in this sector is often significantly higher than in other industries. Specialized insurance coverage is designed to address these high-risk exposures. See below for more information on some of the most common fuel and propane related insurance claims. 

1. A Truck Explosion Causes Major Property Damage

When trucks carrying fuel are involved in collisions, there’s a risk of property damage that extends beyond the truck or even other vehicles on the road. An explosion could damage bridges or nearby buildings, resulting in losses far in excess of those seen in normal traffic accidents. In addition to property damage, fuel truck accidents can trigger environmental cleanup costs and pollution liability claims if a spill contaminates soil or waterways.

Most collisions can be avoided through strong safety protocols, such as:

• Implementing hiring and driver training practices that prioritize safety. Hiring safe drivers is the first step. Training is also important, both for new hires and for experienced drivers.
• Monitoring routes for hazards and rerouting as necessary. It may be necessary to adjust your routes to avoid inclement weather. Also consider roads that may not be safe for large trucks, for example, due to bridges with low clearances or dangerous turns.
• Leveraging telematics, cameras and other safety-focused technologies. These systems can help you correct problems before they lead to claims. Cameras can also provide documentation if a collision occurs.

Although prevention is always ideal, you’ll also want sufficient coverage in place in case a claim occurs. Due to the risk of very high losses, consider purchasing excess liability insurance in addition to your commercial auto insurance.

2. An Accident Results in Severe Bodily Injury

Things like slip and fall incidents, traffic injuries, and back problems from overexertion can happen in any industry. Due to the hazardous nature of fuel, businesses in the fuel and propane sector have additional exposures.

Strong safety policies can prevent many injuries:

• Implement strong safety protocols for drivers. All of the tips in the last section can also help prevent traffic injuries.
• Keep the premises tidy and well lit. Tripping hazards, wet surfaces, and poorly lit areas can contribute to accidents and injuries. Monitor the premises with regular inspections and take appropriate steps to correct any hazards.
• Train workers on safety. In addition to training drivers on how to be safe on the road, it’s also important to train workers on how to avoid other hazards, such as lifting injuries and workplace violence.

Injuries can impact employees, contractors, vendors, customers and other third parties, requiring multiple types of insurance. Review your workers’ compensation, commercial auto liability, general liability, and excess liability limits to ensure your insurance program aligns with the severity of fuel-sector injury claims.

3. A Cyberattack Shuts Down Your Operations

The 2021 ransomware attack against Colonial Pipeline showed just how disruptive cyberattacks can be for the fuel industry. Whether you’re operating a gas station, a warehouse or a distribution company, you likely depend on computer systems to oversee operations, accept payments and handle other critical functions. Cybercriminals may launch an attack to disrupt your operations and coerce you into paying a ransom. You may also store payment details and other information that hackers would like to get their hands on.

Strong cybersecurity can help you minimize the risk of cyberattacks:

• Set up your networks with security in mind. Strong passwords, multifactor authentication, up-to-date applications, network monitoring, encryption, firewalls and other security measures can make it harder for bad actors to launch a successful attack.
• Be on guard against social engineering. From phishing attacks to business email compromise scams, social engineering attacks focus on human vulnerabilities instead of system weaknesses. Train workers on how to avoid social engineering tactics and report any issues.
• Create a cyber response plan. If a cyberattack occurs, a swift response can control the losses. Consider how you would maintain essential operations, control the threat and comply with data breach notification laws after a cyberattack.

Cyber insurance can be an instrumental part of a cyber response plan. However, not all cyber insurance policies offer the same protection. When comparing coverage options, pay particular attention to coverage, limits or exclusions for social engineering and third-party losses. For fuel dealers and propane distributors, cyber insurance should be evaluated alongside business interruption coverage to ensure operational downtime resulting from ransomware or system shutdowns is adequately addressed.

4. Vandals and Thieves Target Your Business

Cyberattacks aren’t the only type of crime fuel companies need to worry about. Criminals could target your property in a number of ways, for example, vandals destroying your equipment, arsonists setting fires, or thieves trying to steal from you.

Strong security can help deter crime:

• Set up lights and cameras to monitor the premises. Cameras can also provide valuable evidence.
• Protect your premises with security guards. This can be done either by hiring security personnel or by using third-party security services.
• Train your workers on how to respond to crime. For example, gas station employees may be exposed to attempted robberies and other crimes, especially if they work overnight. OSHA has recommendations on preventing workplace violence in late-night retail establishments.

Property insurance typically provides coverage for vandalism and certain types of physical damage, while crime insurance may be necessary to address theft, employee dishonesty, or high-value equipment exposures.

Do you have adequate coverage for these and other fuel and propane claims? Tangram provides a specialized fuel and propane insurance program designed for dealers and distributors in the energy sector. In addition to offering coverage options customized for businesses in the fuel and propane industry, we also provide risk management support to help you reduce losses. Learn more.