Kelly,

I think that I can answer your question but I could be wrong.  Gas & Oil Brokerages "contract" abstractors for long term gas & oil projects working in a specific county for up to a year or more.  These individuals are "hired" as independent contractors so that the companies can pay a day rate, but no benefits and do not have to provide unemployment to the state.  It helps the Brokers since they are only "hiring" for the length of the project they may be pulled or end in a matter of weeks.

Title Abstractors will understand that this makes sense but some of these abstractors, some new to the profession, see it as a "job".  You have set work days and hours you are required that sometimes include overtime or Saturdays.  A couple of years ago some abstractors were let go and filed for unemployment.  Of course the State denied them because no unemployment insurance had been paid and the companies said they were "contractors" not employees.  On appeal however the Abstractors won because the Court said that because they worked under set hours like a normal employee they actually were employees and not contractors.

In addition, the IRS with the help of several states, have been cracking down on companies that hire individuals as contractors so that they do not have to pay benefits and unemployment insurance. 

The above actions in addition to the upcoming Obama Care regulations requiring employers to provide insurance have many companies rethinking how they hire independent contractors.  Many of them are requiring that these individuals have some form of business entity such as an LLC or Corporation in addition to business insurance.  This way it is easier for them to show the IRS & states that they actually are hiring "contractors" because they are a legit business.

 Working in the G&O industry I have been told this on several occasions recently. I am not 100% sure exactly why they also want the insurance  but is an attempt to protect themselves (Brokers) & their Gas & Oil Company Clients(BP/Shell, etc) from ANY mis-deeds by the contractors that have little to nothing to do with actual title research.  Its more about if they trash a hotel they are put in or some such nonsense at the court house I would guess.

I hope that this helps.  The insurance they are requesting is basically to support their claim as an independent business and more than likely no claim would ever be filed. Contact me by email or such & I can provide you with more information and one or two of the companies requiring this insurance so that perhaps you can contact them personally for exactly what they need and why.  I have wondered about the insurance exactly myself but never questioned it.

Allen Bruce, Landman & Abstractor