LNG Facility Insurance

Identify the facility function and interfaces

LNG projects can involve liquefaction, storage, regasification, loading, and associated utility or marine infrastructure. Describe the actual facility and the insured’s role in each function. A terminal operator, engineering contractor, and equipment supplier require different insurance analyses even when they work at the same location.

Map the boundaries between process plant, storage, pipeline connections, port facilities, and transportation providers. PHMSA’s LNG safety material discusses facility design and operational safeguards. Use qualified technical and legal advisers to establish current requirements; this resource is an insurance planning guide, not a regulatory determination.

Review specialized assets and recovery time

Identify major equipment, storage systems, electrical infrastructure, control systems, and spare parts. Review replacement values and restoration assumptions with engineering input. Specialized fabrication, transport, installation, testing, and restart steps can make recovery time materially different from a simple equipment purchase lead time.

Compare the proposed property and machinery terms with the actual operations and project phase. Construction, testing, commissioning, and commercial operation may require different arrangements. Ask when one policy ends and another begins, and how partially accepted equipment or a phased handover is treated. Do not leave the transition to assumption.

Connect liability, pollution, and interruption review

An LNG incident can raise property, third-party liability, environmental, and business interruption questions. Evaluate these categories separately, including dependencies on gas supply, power, export or delivery facilities, and marine access. A loss at a third-party facility may require a different coverage trigger from damage to insured property.

Review contracts for custody of product, transportation obligations, and consequences of unavailable capacity. Do not assume that take-or-pay commitments, market losses, or delayed delivery are insured. Counsel should assess legal allocations while the broker reviews relevant definitions, exclusions, conditions, and available underwriting terms.

Prepare a phase-specific insurance submission

Provide the process overview, asset values, engineering information, operating or construction schedule, loss history, and principal contracts. Identify critical equipment and the parties responsible for maintenance, emergency response, and marine operations. State clearly whether the facility is proposed, under construction, commissioning, or operational.

Record unresolved questions about testing, delay, product custody, and offsite dependencies. Update the insurance review as the project reaches each milestone. A policy suitable for an established operating terminal should not automatically be treated as adequate for a new project or a significant expansion.

For expansions at an operating site, identify whether new and existing systems share utilities, control infrastructure, or access. A construction event may therefore affect an established revenue stream as well as the new project. The insurance review should address that interaction explicitly instead of assuming separate project and operational policies will coordinate without examination of their terms and insured interests.