§ 32-86. Insurance.

In addition to the bond or letter of credit required by this article, the operator shall carry a policy of insurance issued by an insurance company authorized to do business in Texas. In the event such insurance policy is cancelled, the gas well permit shall be suspended on such date of cancellation and the operator's right to operate under such gas well permit shall immediately cease until the operator files additional insurance as provided herein.

(1)

General requirements applicable to all policies.

a.

The city, its officials, employees, agents and officers shall be endorsed as an additional insured to all policies except employers' liability coverage under the operator's workers compensation policy.

b.

All policies shall be written on an occurrence basis.

c.

All policies shall be written by an insurer with an A-: VIII 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 city.

d.

Deductibles shall be listed on the certificate of insurance and shall be on a per occurrence basis unless otherwise stipulated herein.

e.

Certificates of insurance shall be delivered to the city administrator, evidencing all the required coverage's, including endorsements, prior to the issuance of a gas well permit.

f.

All policies shall be endorsed with a waiver of subrogation providing rights of recovery in favor of the city.

g.

Any failure on part of the city to request required insurance documentation shall not constitute a waiver of the insurance requirement specified herein.

h.

Each policy shall be endorsed to provide the city a minimum 30-day notice of cancellation, nonrenewal, and/or material change in policy terms or coverage. A ten-day notice shall be acceptable in the event of nonpayment of premium.

i.

During the term of the gas well permit, the operator shall report to the inspection services provider, in a timely manner, any known loss occurrence which could give rise to a liability claim or lawsuit or which could result in a property loss.

j.

Upon request, certified copies of all insurance policies shall be furnished to the city.

(2)

Standard commercial general liability policy. This coverage must include premises, operations, blowout or explosion, products, completed operations, sudden and accidental pollution, blanket contractual liability, underground resources damage, broad form property damage, independent contractor's protective liability and personal injury. This coverage shall be a minimum combined single limit of $1,000,000.00 per occurrence for bodily injury and property damage.

(3)

Excess or umbrella liability.

a.

$5,000,000.00 excess, if the operator has a stand-alone environmental pollution liability (EPL) policy.

b.

$10,000,000.00 excess, if the operator does not have a stand-alone EPL policy. Coverage must include an endorsement for sudden or accidental pollution.

(4)

Environmental pollution liability coverage.

a.

The operator shall purchase and maintain in force for the duration of the gas well permit, 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 $1,000,000.00 per loss, with an annual aggregate of at least $10,000,000.00.

b.

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.

(5)

Control of well. The policy shall cover the cost of controlling a well that is out of control, redrilling or restoration expenses, seepage and pollution damage as first party recovery for the operator and related expenses, including, but not limited to, loss of equipment, experts and evacuation of residents. Coverage shall be maintained in an amount of at least:

a.

$5,000,000.00 per occurrence/no aggregate, if available, otherwise an aggregate of $10,000,000.00.

b.

$500,000.00 sub-limit endorsement may be added for damage to property for which the operator has care, custody and control.

(6)

Workers compensation and employers liability insurance.

a.

Workers compensation benefits shall be state statutory limits.

b.

Employers liability shall be a minimum of $500,000.00 per accident.

c.

Such coverage shall include a waiver of subrogation in favor of the city and provide coverage in accordance with applicable state and federal laws.

(7)

Automobile liability insurance.

a.

Combined single limit of $1,000,000.00 per occurrence for bodily injury and property damage.

b.

Coverage must include all owned, hired and not-owned automobiles.

(8)

Certificates of insurance.

a.

The company must be admitted or approved to do business in the state, unless the coverage is written by a surplus lines insurer.

b.

The insurance policies must be underwritten on forms that have been approved by the state board of insurance or ISO, or an equivalent policy form acceptable to the city, with the exception of environmental pollution liability and control of well coverage.

c.

Sets forth all endorsements and insurance coverage according to requirements and instructions contained herein.

d.

Shall specifically set forth the notice of cancellation, termination, or change in coverage provisions to the city. All policies shall be endorsed to read:

This policy will not be cancelled or nonrenewed without 30 days' advanced written notice to the owner and the City of Justin except when this policy is being cancelled for nonpayment of premium, in which case ten days' advance written notice is required.

e.

Original endorsements affecting coverage required by this section shall be furnished with the certificates of insurance.

(Code 1994, § 4.715; Ord. No. 496, § 1, 8-18-2010)