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Why You Need Extra Rail Insurance Blog Post

Blog post about why you need rail insurance.

Why You Need Extra Rail Insurance


Is Your Railway Transporting Oil?

Not too long ago, the go-to strategy for shipping oil was via large oil pipelines. These pipelines provided several advantages—namely, they kept oil contained and away from road and rail—but they also had a few significant drawbacks. For refineries located far from a pipeline terminals, it was inconvenient to utilize pipeline conveyance. In some oil-rich areas, there was simply more demand for oil shipping than nearby pipelines could manage.

Because of these factors, oil companies looked for alternative means to ship oil. The answer, in many cases, was to use the rails. Railroads crisscross Canada (and North America as a whole) much more widely than pipelines. With rail transport, the location of the refinery matters a little less. A refinery that isn’t near an oil pipeline terminal still has other options for shipping.

The boom in oil industry rail transport has been big for railway operators. The railway operators own the rails and the engines, and sometimes the transport cars. The oil companies pay to use the rails, the engines, and the transport cars. The rail operators, in turn, agree to transport the oil freight from Point A to Point B. It’s an effective option, and an agreeable one for both parties.



If there’s a problem with this shift in oil hauling, it’s that crude oil is no longer as contained during shipping as it once was. When oil flowed through large pipelines, the only risks for spills and pollution were holes or breaches in the pipeline. With trains, there is the risk of derailment or collision, which can cause massive spills that damage property, the environment, and more.

Because of these risks, the focus on rail insurance has become more pronounced in recent years. In 2015, the Canadian Government changed the law, requiring railways to carry extra insurance when hauling shipments of crude oil. This was due to a 2013 incident where the explosion of a runaway train carrying crude oil killed 47 people in athe Quebec village of Lac-Mégantic.


Rail Insurance Coverages

In case of a derailment, rail liability insurance can save railways from bankruptcy. Typically, the rail insurance covers multiple potential consequences of an oil train derailment. This can include physical injury or property damage, and cargo damage or loss. Foreign Rolling Stock (rail cars the railway operator doesn’t own), oil spill cleanup, and more are further risks that can be covered by rail insurance.


How We Can Help

Guild Insurance Brokers & HMS Insurance Agencies help railway operators, contractors, and suppliers throughout Canada with their rail insurance needs. We have been involved in Canadian rail insurance for more than 30 years and know the minutiae of the coverage these companies need. If your business requires rail insurance, we can provide it. If need to know your obligations as a railway helping with the carriage of crude oil, we can assist you with that too. Click Get a Quote Now for a rail insurance quote.


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