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Houston Energy Companies Expanding to Venezuela: Commercial General Liability Our Insurance Guide

Houston energy companies pursuing Venezuela’s $58 billion oil infrastructure opportunity face massive liability exposures. Standard commercial insurance excludes international energy operations. Specialized general liability coverage protects drilling contractors, equipment manufacturers, joint ventures, and corporate facilities from catastrophic losses.

We got a call in September from a Houston-based drilling contractor who’d just signed a $12 million contract to rehabilitate three Venezuelan wellheads near Lake Maracaibo. Exciting opportunity—Venezuela’s lifting sanctions, PDVSA needs everything, and this contractor had the expertise they wanted. The problem showed up when their attorney reviewed the joint venture agreement. PDVSA required $10 million in general liability coverage with them named as additional insured. The contractor’s current GL policy had a $2 million limit and explicitly excluded “operations outside the United States and its territories.”

He thought he could just call his carrier and increase the limits. Instead, they declined to extend coverage to Venezuela entirely. Too much political risk, they said. Too much uncertainty around contract enforcement. That’s when we started working together to find a carrier willing to write specialized coverage for Latin American energy operations.

This is the reality for Houston energy companies looking at Venezuela right now. The opportunities are massive—some analysts estimate Venezuela needs $58 billion in infrastructure investment over the next decade just to restore production to 2000 levels. But standard commercial insurance won’t cover these operations. You need specialized general liability policies written specifically for international energy sector work, and you need brokers who understand both the insurance markets and the Venezuela business environment.

Why Standard Commercial GL Policies Fail for Venezuela Operations

Most business general liability policies contain absolute exclusions for international operations, particularly in countries with elevated political risk. We see this constantly: companies expand internationally, assume their existing coverage follows them, and discover during a claim that they’ve been operating naked for months.

The standard ISO commercial general liability form includes several provisions that create coverage gaps for Venezuela operations:

Geographic Limitations

Many policies restrict coverage to the United States, Canada, and their territories. Venezuela operations fall outside this coverage territory entirely. Even if your Houston office coordinates everything, liability arising from Venezuelan activities typically isn’t covered.

Contractual Liability Exclusions

PDVSA and Venezuelan government contracts often include indemnification provisions that go beyond what standard GL policies will cover. Hold harmless agreements, additional insured requirements, and primary and non-contributory provisions may not be fully addressed without manuscript endorsements.

Foreign Government Exclusions

Some policies explicitly exclude claims arising from contracts with foreign government entities. Since PDVSA is state-owned and most Venezuela energy work involves government agencies, this exclusion can eliminate coverage entirely.

Excess of $25,000 Property Damage

Venezuela’s aging infrastructure means property damage claims frequently exceed standard policy sublimits. A drilling incident that damages 50-year-old pipelines can easily generate $500,000 in third-party property damage.

The insurance carriers aren’t being unreasonable here. Venezuela operations present genuine underwriting challenges: currency exchange volatility, contract enforcement uncertainty, political instability, and aging infrastructure with higher loss frequency. Carriers that write this coverage charge appropriate premiums and require extensive underwriting information about your specific operations.

What Houston Energy Companies Actually Need for Venezuela Coverage

Based on our experience placing coverage for energy companies expanding into Latin America, here’s what we consistently see as necessary:

Operations Office General Liability

If you’re establishing a Venezuela operations office—even a small liaison office in Caracas coordinating projects—you need premises liability coverage for that facility. Learn more about operations office insurance requirements.

Standard coverage includes:

• Slip and fall liability for visitors (including PDVSA executives and government officials)
• Property damage to leased office space
• Fire legal liability if you’re leasing rather than owning
• Host liquor liability for corporate events with Venezuelan business partners

A Houston consulting firm we work with hosts quarterly meetings with Venezuelan energy ministry officials to discuss ongoing projects. During one meeting, a ministry official slipped on a wet floor in their conference room and fractured his wrist. The medical bills were minor ($4,500), but the diplomatic complications of a foreign government official injured at their facility created weeks of administrative headaches. Their GL policy’s medical payments coverage paid immediately without requiring a liability determination, which helped maintain the business relationship.

Drilling Contractor Liability Coverage

Drilling operations in Venezuela present extreme liability exposures due to aging infrastructure and deferred maintenance. Comprehensive drilling contractor coverage requirements go far beyond standard GL policies.

Key exposures include:

• Blowout and well control liability
• Third-party bodily injury from drilling incidents
• Damage to adjacent wells and production facilities
• Environmental liability from surface spills
• Completed operations coverage after project completion

Venezuela’s oilfields haven’t seen significant capital investment since the mid-2000s. You’re working with 50-year-old wellheads, corroded casing, and deteriorating blowout preventers. When something fails—and given the infrastructure condition, failures are likely—the resulting liability can be enormous. A single blowout could generate $50 million in cleanup costs, production losses, and third-party claims.

Products and Completed Operations Coverage

If your company manufactures oilfield equipment shipping to Venezuela, you need products-completed operations insurance that extends beyond domestic work.

This covers:

• Product defect liability after installation
• Equipment failure causing operational shutdowns
• Installation and commissioning errors by your technicians
• Product recall costs if defects are discovered

We placed coverage last year for a Houston manufacturer shipping downhole pumps to Venezuela. Six months after installation, one pump failed catastrophically, flooding a production facility and causing $2.3 million in damage. The manufacturer’s standard products liability policy would have covered domestic installations, but their policy excluded international sales. We had fortunately added a manuscript endorsement extending coverage to Latin American exports before the equipment shipped. Without that endorsement, they would have been personally liable for the full $2.3 million claim.

Joint Venture Contractual Liability

Many Houston energy companies are forming joint ventures with Venezuelan partners or PDVSA directly. These partnerships create contractual liability exposures that require specialized insurance treatment.

Joint venture agreements typically include:

• Mutual indemnification provisions
• Additional insured requirements for all parties
• Primary and non-contributory coverage mandates
• Waiver of subrogation between partners

The challenge is that each party to the joint venture may have different insurance programs, different carriers, and different coverage limits. Coordinating these programs to ensure contractual obligations are met requires careful policy review and often manuscript endorsements. We spend significant time reviewing master service agreements and joint venture contracts to identify insurance requirements before coverage is bound.

Subcontractor Insurance Requirements

If you’re the general contractor on Venezuela reconstruction projects, you need to flow down insurance requirements to all subcontractors. Subcontractor insurance management protects you from liability when vendors don’t carry adequate coverage.

Standard requirements include:

• Certificates of insurance (COI) before work begins
• Additional insured endorsements naming your company
• Primary and non-contributory coverage (your policy doesn’t pay first)
• Waiver of subrogation protecting you from carrier recovery

One Houston general contractor we work with learned this lesson expensively. They hired a local Venezuelan scaffolding subcontractor who claimed to have proper insurance. A scaffolding collapse injured three workers, and when the contractor tried to tender the claim to the subcontractor’s carrier, they discovered the policy had lapsed six months earlier. The general contractor’s GL carrier paid the $1.4 million claim, then increased their premiums 65% at renewal because of the loss history.

Advertising Injury and Marketing Liability

As you market your Venezuela operations capabilities to attract additional contracts, you face advertising injury exposures that GL policies specifically address.

Coverage includes:

• Defamation and libel from marketing materials
• Copyright infringement using competitor content
• Misappropriation of ideas or business concepts
• False advertising claims

Energy sector marketing has become increasingly aggressive as companies compete for limited Venezuela project awards. Claiming capabilities you don’t actually have, using competitor photos in proposals, or misrepresenting past project success can all trigger advertising injury claims. We’ve seen multiple cases where companies face six-figure legal defense costs defending against competitor allegations of false advertising in project bids.

Medical Payments for Corporate Visitors

Your GL policy should include medical payments coverage for visitors to your Houston headquarters discussing Venezuela projects.

This covers:

• Immediate medical expenses without liability determination
• No-fault payment up to policy sublimit (typically $5,000-$10,000)
• Foreign visitor medical care if needed
• Emergency response costs

Medical payments coverage is particularly valuable when hosting foreign government officials and PDVSA executives. If a visitor is injured at your facility, immediate no-fault payment helps maintain business relationships without requiring lengthy liability investigations. One energy services company we work with had a Venezuelan ministry official fall in their parking lot, requiring ER treatment. Their GL policy’s medical payments provision paid the $3,200 hospital bill immediately, avoiding any diplomatic complications about whose fault the fall was.

Fire Legal Liability for Leased Facilities

If you’re leasing Houston office or warehouse space to support Venezuela operations, you need fire legal liability coverage protecting your landlord’s property.

Coverage includes:

• Tenant liability for fire damage to the building
• Smoke and water damage from fire suppression
• Landlord’s business interruption from tenant-caused fires
• Legal defense costs for landlord claims

Standard commercial property insurance only covers your contents and improvements—not your legal liability for damaging the building itself. Fire legal liability closes this gap, which is particularly important if you’re storing Venezuela-bound equipment or hazardous materials that increase fire risk.

Host Liquor Liability for Corporate Events

Houston energy companies regularly host corporate events with Venezuelan business partners where alcohol is served. Host liquor liability protects you from third-party alcohol-related claims.

Coverage includes:

• Third-party injury caused by intoxicated guests
• Auto accidents after corporate events
• Assault and battery by intoxicated attendees
• Legal defense against social host claims

Even though you’re not selling alcohol (which would require liquor liability insurance), merely serving it at corporate functions creates liability exposure. A Venezuelan partner who gets drunk at your company holiday party, drives home, and causes an accident could trigger claims against your business for over-serving them. Host liquor liability is an inexpensive addition to your GL policy that protects against these scenarios.

Understanding the Venezuela Energy Market Context

To properly underwrite GL coverage for Venezuela operations, insurance carriers need to understand the current market conditions. Here’s what we’re seeing as of early 2025:

Sanctions Environment – U.S. sanctions against Venezuela have been partially lifted, allowing American energy companies to negotiate contracts and establish operations. However, specific license requirements still apply for certain activities, and the sanctions environment could shift based on political developments.

PDVSA’s Financial Condition – Venezuela’s state oil company is essentially bankrupt and desperately needs foreign investment and expertise to restore production. This creates tremendous opportunity but also increases contractual and payment risks.

Infrastructure Condition – Venezuelan oil infrastructure hasn’t been properly maintained since the mid-2000s. Production has collapsed from 3.5 million barrels per day in 1998 to under 700,000 barrels per day currently. The deterioration means higher operational risks and greater likelihood of equipment failures and incidents.

Legal System Uncertainty – Venezuela’s court system is notoriously unreliable for foreign companies. Contract disputes often take years to resolve, and enforcement of judgments is inconsistent. This uncertainty affects how liability claims are handled and resolved.

Currency and Payment Risk – Venezuela’s economy has experienced hyperinflation, currency devaluation, and payment delays. Companies need strong contractual protections around payment terms, currency conversion, and hard currency access.

All of these factors influence how carriers underwrite GL coverage for Venezuela operations and what premiums they charge. Carriers willing to write this business typically have experience in Latin American energy markets and understand the risk profile.

How Much Does Venezuela Operations GL Insurance Cost?

The premium for Venezuela operations general liability coverage varies dramatically based on your specific activities, revenue, and loss history. Here’s what we typically see:

Operations Office Only – If you’re just establishing a small liaison office with 5-10 employees coordinating projects, expect $15,000-$35,000 annually for $2 million per occurrence / $4 million aggregate limits.

Drilling Contractor Operations – For active drilling work, premiums start at $100,000 annually for smaller contractors and can exceed $500,000 for larger operations with multiple rigs and significant exposure. Carriers underwrite these risks individually based on detailed operational information.

Equipment Manufacturing/Sales – Products liability for oilfield equipment exports typically costs 0.5%-1.5% of Venezuela-specific sales revenue. A manufacturer with $10 million in annual Venezuela sales might pay $50,000-$150,000 for products-completed operations coverage.

Joint Venture Operations – Complex joint ventures with multiple partners often require manuscript policies with premiums ranging from $75,000 to $250,000+ depending on project scope and contractual obligations.

The key driver of premium isn’t just what you’re doing in Venezuela—it’s how much revenue you’re generating there and what your contractual liability exposures look like. A $5 million contract will carry very different premiums than a $100 million multi-year project.

Finding Carriers Willing to Write Venezuela Energy Coverage

Not all insurance carriers will write GL coverage for Venezuela operations. The market is specialized and limited. Based on our experience placing this coverage, here are carriers with appetite for Latin American energy risks:

Domestic Carriers:

• AIG – Strong international energy division with Latin America focus
• Chubb – Writes complex international energy accounts
• Zurich – Appetite for mid-to-large energy operations
• Liberty Mutual – Selective appetite through specialty division

Lloyd’s of London Syndicates:

• Multiple Lloyd’s syndicates write Latin American energy risks
• Often provide higher limits than domestic carriers
• More flexible terms but typically higher premiums

International Carriers:

• Munich Re – Strong Latin American presence
• Swiss Re – Writes complex international accounts
• Allianz – Limited appetite but available for right accounts

The key is working with a broker who has existing relationships with these carriers and understands their specific appetites and underwriting requirements. Cold-calling carriers with a Venezuela energy submission typically results in declines. Introductions through established broker relationships significantly improve placement success.

What Underwriters Need to Quote Venezuela GL Coverage

When we submit Venezuela operations for GL coverage, carriers consistently request the following information:

Corporate Information:

• Completed application (ACORD forms)
• Company financial statements (last 3 years)
• Ownership structure and key principals
• D&B report and credit rating
• Current insurance declarations pages

Operations Details:

• Detailed description of Venezuela activities
• Revenue breakdown by operation type
• Number of employees (Houston and Venezuela)
• Subcontractor usage and oversight
• Safety programs and training protocols

Contract Information:

• Sample contracts with PDVSA or Venezuelan partners
• Insurance requirements from those contracts
• Indemnification provisions
• Payment terms and currency protections

Loss History:

• Five years of loss runs from current carriers
• Any pending claims or incidents
• Description of significant past losses
• Changes made to prevent future losses

Venezuela-Specific Information:

• Sanctions license documentation
• Local partner information
• Security protocols
• Evacuation procedures
• Political risk mitigation strategies

The more detailed information you can provide upfront, the faster carriers can quote and the more competitive terms you’ll receive. Incomplete submissions trigger multiple rounds of follow-up questions and delay binding coverage.

Common Mistakes Houston Energy Companies Make

After placing Venezuela operations coverage for dozens of energy companies, we see these mistakes repeatedly:

Assuming Existing Coverage Extends Automatically – This is the biggest mistake. Companies expand to Venezuela, never notify their insurance broker, and assume their GL policy covers the new operations. When a claim occurs, they discover the policy excludes international work.

Waiting Until Contract Signature – Getting specialized GL coverage in place takes 4-8 weeks if you’re a new account to the carrier. Don’t wait until you’ve signed the PDVSA contract to start the insurance process. Begin conversations with your broker as soon as Venezuela opportunities become serious prospects.

Focusing Only on Price – Venezuela operations coverage is specialized and expensive. Shopping solely on premium without considering coverage breadth, carrier financial strength, and claims handling reputation often backfires when you actually need the coverage.

Ignoring Subcontractor Insurance Management – If you’re hiring local Venezuelan subcontractors, verifying their insurance coverage is extremely difficult. Many don’t carry adequate limits, and policy verification is challenging. Strong contractual indemnification and requiring subcontractors to name you as additional insured is critical.

Misunderstanding Additional Insured Requirements – PDVSA contracts typically require they be named as additional insured on your GL policy. Simply adding them to your policy doesn’t always satisfy the contract requirement—you need specific endorsements with primary and non-contributory language that match the contract provisions exactly.

How Hotaling Insurance Services Approaches Venezuela Operations Coverage

We’ve been working with Houston energy companies since the 1980s, through multiple oil boom and bust cycles. Our approach to Venezuela operations is built on three decades of Latin American energy market experience.

First, we start with a comprehensive contract review. Before we even approach insurance carriers, we need to understand exactly what insurance obligations your Venezuela contracts create. Our attorneys review PDVSA agreements, joint venture terms, and subcontractor requirements to identify every insurance mandate in the contracts.

Second, we leverage our carrier relationships strategically. Not every carrier wants Venezuela business, and the ones that do have specific appetites. AIG might be perfect for drilling contractors but decline equipment manufacturers. Chubb might love joint ventures but won’t touch operations offices. We know which carriers to approach for which exposures, which dramatically improves placement success rates.

Third, we provide ongoing contract compliance monitoring. Venezuela operations insurance isn’t a “set it and forget it” situation. As your operations expand, as you hire new subcontractors, as you sign new contracts with different insurance requirements, your coverage needs to evolve. We maintain regular quarterly reviews to ensure your program remains compliant with all contractual obligations.

Finally, we coordinate with your political risk insurance, kidnap and ransom coverage, and foreign property insurance to create an integrated international program. General liability is just one piece of your Venezuela risk management, and it needs to work seamlessly with your other coverages.

Making the Decision to Pursue Venezuela Opportunities

Venezuela represents both tremendous opportunity and significant risk for Houston energy companies. The $58 billion infrastructure investment needed over the next decade will generate countless contracts for drilling contractors, equipment manufacturers, service companies, and consultants with Latin American expertise.

But pursuing these opportunities without proper general liability insurance is extraordinarily risky. A single blowout, a major equipment failure, a serious injury at your operations office, or a joint venture contractual dispute could generate losses that bankrupt your company. Standard commercial insurance won’t protect you—you need specialized coverage designed specifically for international energy operations.

The insurance isn’t cheap. Depending on your exposure, expect to pay $50,000 to $500,000+ annually for comprehensive GL coverage. But compare that to the potential losses: a blowout generating $50 million in liability, a products liability claim for $10 million in equipment failures, or contractual damages of $25 million from a joint venture dispute. The coverage isn’t expensive relative to your exposure.

If you’re a Houston energy company seriously evaluating Venezuela opportunities, start the insurance conversation early. Share your contract proposals with your broker before you sign them. Understand what insurance carriers will and won’t cover. Build insurance costs into your project bids. And most importantly, don’t operate without proper coverage in place.

The Venezuela opportunity won’t last forever. As sanctions lift and operations normalize, competition will intensify and margins will compress. The companies that move decisively now—with proper insurance protection in place—will be best positioned to capture long-term value in Venezuela’s oil sector reconstruction.

Frequently Asked Questions

What’s the minimum GL coverage limit for Venezuela PDVSA contracts?

Most PDVSA contracts require minimum general liability coverage of $5 million per occurrence / $10 million aggregate. Some larger infrastructure projects require $10 million per occurrence or higher. Review your specific contract for exact requirements, as they vary by project scope.

Can I get Venezuela operations coverage from my current insurance carrier?

Possibly, but most standard commercial carriers decline international energy operations. You’ll likely need a specialty carrier with Latin American energy expertise. AIG, Chubb, and certain Lloyd’s syndicates are your best options for this coverage.

How long does it take to get Venezuela operations GL insurance in place?

For new accounts, expect 4-8 weeks from submission to binding coverage. This includes carrier underwriting review, quote preparation, negotiation of terms, and policy issuance. If you’re adding coverage to an existing program with a carrier who already knows your operations, it can be faster.

Do I need separate coverage for my Houston office and Venezuela operations?

Not necessarily separate policies, but your GL policy needs manuscript endorsements extending coverage to Venezuela operations. Standard domestic GL policies exclude international work, so specific geographic extensions are required.

What happens if my subcontractor in Venezuela doesn’t have proper insurance?

You become liable for claims arising from their work. This is why strong contractual indemnification and requiring subcontractors to name you as additional insured is critical. Many Houston general contractors require their GL carrier to verify Venezuela subcontractor insurance before allowing them on projects.

Are there carriers that specialize in Venezuela energy operations?

Yes, though the market is small. AIG’s international energy division writes significant Latin American business. Certain Lloyd’s syndicates specialize in emerging market energy risks. Swiss Re and Munich Re have appetite for larger accounts. Working with a broker who has existing relationships with these carriers is essential.

Can I get coverage if I’ve already started Venezuela operations without insurance?

Yes, but it’s more difficult and expensive. Carriers view this as poor risk management and may decline or charge higher premiums. You’ll likely need to disclose any incidents or near-misses that occurred while you were uninsured.

How are claims handled when they occur in Venezuela?

Most GL policies for Venezuela operations include provisions requiring claims to be adjusted in the United States despite occurring in Venezuela. This protects you from Venezuelan court system uncertainty. Your carrier typically sends adjusters to Venezuela to investigate, but formal claim handling occurs in Houston.

This article is for informational purposes only and does not constitute legal or insurance advice. Venezuela operations insurance requirements vary based on specific contracts, operations, and carrier underwriting. Consult with licensed insurance professionals and legal counsel before pursuing Venezuela opportunities.