(A) In addition to the bond required pursuant to this chapter, the operator shall carry a policy or policies of insurance issued by an insurance company or companies authorized to do business in Texas. In the event such insurance policy or policies are cancelled, the gas well permit shall be suspended on such date of cancellation and the operator’s right to operate under the gas well permit shall immediately cease until the operator files additional insurance as provided herein.
(B) General requirements applicable to all policies.
(1) The town, its officials, employees, agents and officers shall be endorsed as an additional insured on all applicable policies. A copy of the endorsement is required for evidence of coverage.
(2) All policies shall be endorsed with a waiver of subrogation in favor of the town. A copy of the endorsement is required for evidence of coverage.
(3) All policies shall be written on an occurrence basis where commercially available. It is provided, however, that all insurance obtained for pollution and environmental damage shall be on a claims-made basis.
(4) If coverage is written on a claims-made basis, the operator must maintain continuous coverage or purchase extended period coverage insurance for four years following expiration or suspension of the gas well permit or four years following the plugging of any well. The extended coverage period insurance must provide that any retroactive date applicable to coverage under the policy precedes the effective date of the issuance of the permit by the town.
(5) All policies shall be written by an insurer with an A-: VII or better rating by the most current version of the A. M. Best Key Rating Guide or with such other financially sound insurance carriers acceptable to the town.
(6) Deductibles shall be listed on the certificate of insurance and shall be on a per occurrence or per claim made basis unless otherwise stipulated herein. It is provided, however, that the town may object to the amount of the deductible and require a lower amount.
(7) Certificates of insurance shall be delivered to the Town of Lakeside, Town Administrator, evidencing all the required coverages, including endorsements, prior to the issuance of a gas well permit.
(8) Any failure on part of the town to request required insurance documentation shall not constitute a waiver of the insurance requirement specified herein.
(9) Each policy shall be endorsed to provide the town a minimum 30-day notice of cancellation, non-renewal, and/or material change in policy terms or coverage. A ten-day notice shall be acceptable in the event of nonpayment of premium.
(10) During the term of the gas well permit, the operator shall report, in a timely manner, to the Inspector any known loss occurrence which could give rise to a liability claim or lawsuit or which could result in a property loss.
(11) Upon request, certified copies of all insurance policies shall be furnished to the town.
(12) Irrespective of the requirements as to insurance to be carried, the insolvency, bankruptcy or failure of any insurance company to pay claims accruing shall not be held to waive any of the provisions of this section.
(13) Operator shall pay promptly all premiums for such insurance in strict accordance with its obligations to its carrier and maintain the required coverage in full effect so long as the permit is valid.
(14) Failure to keep such policies in full force and effect, in accordance with the terms hereof, shall be unlawful.
(15) The insurance required herein may be met by a combination of primary and excess insurance coverage. In addition, the operator may request that some of the insurance coverage consist of self-insurance by the operator. If the operator requests self-insurance, it shall submit an application to the Town Administrator that details the amount and type of coverage it wants to be covered by primary and excess insurance and the exact dollar amount and type of coverage it wants to be self-insured. The Town Administrator shall place such request on the agenda of the City Council. After consideration, the Council, in its sole discretion, may accept, reject or modify the self insurance to be allowed.
(C) Commercial general liability policy. This coverage must include premises, operations, blowout or explosion, products, completed operations, sudden and accidental pollution (with discovery and reporting periods of not less than 15 days and 30 days respectively), blanket contractual liability, underground resources damage, broad form property damage, independent contractors protective liability and personal injury. This coverage shall be a minimum of $1,000,000 per occurrence.
(D) Excess or umbrella liability. Insurance limits in a minimum of $10,000,000. Coverage is to be at least as broad as, applies of and follows form of the primary liability coverage required for commercial general liability, auto liability and employer’s liability. Coverage must include an endorsement for sudden or accidental pollution.
(E) Environmental pollution liability coverage.
(1) Operator shall purchase and maintain in force for the duration of the gas well permit and for a period of four years after a well is plugged, insurance for environmental pollution liability applicable to bodily injury, property damage, including loss of use of damaged property or of property that has not been physically injured or destroyed; cleanup costs; and defense, including costs and expenses incurred in the investigation, defense or settlement of claims; all in connection with any loss arising from the insured site. Coverage shall be maintained in an amount of at least $5,000,000 per loss with an annual aggregate of at least $10,000,000.
(2) Coverage shall apply to sudden and accidental pollution conditions resulting from the escape or release of smoke, vapors, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste material or other irritants, contaminants or pollutants and shall also explicitly include water pollution.
(3) The extended coverage period insurance must provide that any retroactive date applicable to coverage under the policy precedes the effective date of the issuance o the permit by the town.
(F) Control of well coverage. The policy should cover the cost of controlling a well that is out of control, re-drilling or restoration of any environmental, water or other similar conditions, expenses pertaining to same, seepage and pollution damage as first party recovery for the operator and related expenses, including, but not limited to, loss of equipment; fees of experts, consultants and other technical persons; and evacuation of residents. Minimum coverage shall be $5,000,000 per occurrence or per claim as is appropriate. A $500,000 sub-limit endorsement may be added for damage to property for which the operator has care, custody, and control.
(G) Workers compensation and employers liability insurance.
(1) Workers compensation benefits shall be Texas statutory limits.
(2) Employers’ liability shall be a minimum of $500,000 per accident.
(3) Such coverage shall include a waiver of subrogation in favor of the town and provide coverage in accordance with applicable state and federal laws.
(H) Automobile liability insurance.
(1) Combined single limit of $1,000,000 combined single limit per occurrence for bodily injury and property damage.
(2) Coverage must include all owned, hired and not-owned automobiles.
(3) The town shall be named as an additional insured on the policy and provided with a waiver of subrogation.
(I) Certificates of insurance.
(1) The company must be admitted or approved to do business in the State of Texas, unless the coverage is written by a surplus lines insurer.
(2) The insurance set forth by the insurance company must be underwritten on forms that have been approved by the Texas State Board of Insurance or ISO, or an equivalent policy form acceptable to the town, with the exception of environmental pollution liability and control of well coverage.
(3) Sets forth all endorsements and insurance coverage according to requirements and instructions contained herein.
(4) Shall specifically set forth the notice of cancellation, termination, or change in coverage provisions to the town. All policies shall be endorsed to read:
“This policy will not be cancelled or non-renewed without 30 days’ advanced written notice to the owner and the town except when this policy is being cancelled for nonpayment of premium, in which case ten days’ advance written notice is required.”
(5) Evidence of such endorsement shall be provided at the time the certificate or evidence of insurance coverage and endorsements is provided to the town.
(Ord. 326, passed 7-14-2011) Penalty, see § 154.999