I remember the first time I drove a tractor, with my older brother giving me a lesson on the gears and how to operate the clutch I managed to back it square in... into a compactor knocking it over. Very quickly came my next lesson on a 12 tonner to pick it back upright.
We love machinery and for many of us here at Seneca it's in our blood. Whether you're talking diggers, dozers, access gear, tractors or cranes, one of our aims is to make sure we get the advice right around how you insure your equipment because at the end of the day for most of you its how you make your money.
With that in mind we thought we'd cover off some of the basics that you should be considering when insuring your machinery.
The Basics: Road vs Off Road
This is one of the big ones and in many cases its also your biggest opportunity when looking at your fleet list. Machinery is less likely to have a small claim in comparison to road going fleet and if you're racking up claims on one side its important to distinguish what gear belongs where.
Of course a challenge is looking at what equipment is a hybrid (such as cranes and some Agri gear) traveling both on road and onsite.
While traditionally most equipment is stuck under your commercial vehicle insurance it's worth considering a specialist policy.
Level Up: Additional Cover
Getting the basics right is really important and by using a specialist, you might find you've gained access to types of cover you've never had before. Some of these are optional while others are automatic for your machine.
While on large fleets this isn't a huge issue, with other machines stepping in for that downtime the repair costs can start to mount! On smaller fleets its often very important because repair cost plus not running means a double hit in the wallet.
Mechanical Breakdown is essentially cover for unforeseen breakdowns, and partnered with good service and maintenance regimes it can be a real money saver.
Finances Lease vs Own
Capital is cheap at present with some dealers offering little to no interest on buying new equipment, but it's important to note them as an interested party and make sure you don't skimp on the sum insured of the gear. Getting caught short might means writing off the gear and still having a piece to pay the lender.
Agreed Value and Appreciation
Come claim time making sure you get paid the right value for your machine is one of our top priorities, if that machine is going to get written off. Understanding the "basis of settlement" might mean a difference of thousands of dollars.
Take a Caterpillar D6 Dozer as an example: purchase price on a second hand machine can run between $150-250k and setting an agreed value is pretty simple if you purchased the machine for $175k then you can set the value at that. However, it might be harder to find a replacement machine at the time of loss, which could mean running a cost of over $200k to replace it! Now who pays the difference?
On machines that are harder to replace we'd suggest covering machines using a Market Value + Appreciation cover. In short, this basis of settlement allows the value to fluctuate an additional 25% of the sum insured.
Cat D6 original cost $175,000
Maximum replacement cost $218,750
Big difference right?
Lost Income and Lost Use
This type of cover can become really important to protect your income or the bottom line of the business and to explain it I'm going to give you two claims as an example:
12t Sumitomo rolled - Small Operator
In this claim (involved lifting the damaged machine out with a 100T crane) thankfully only minor repairs were needed but a 8 week wait for parts meant a repair ballooned to 11 weeks total. Thankfully, we had insured Loss of Use, meaning after the initial accident a rental machine was paid for and onsite working while the repair was carried out.
Mobile Crusher Screening Plant Fire - Aggregate operation
Specialist machinery and plant can cause a huge dip in revenue when it's not running. One of the little thought about concepts is that a large downtime can occur when the machine is written off and waiting for its replacement. In this case it's simple math, with no rental machine available and with a production capacity of 220 tons per hour, the 1 month wait for the urgent replacement has a severe impact on the business.
When an accident happens it's pretty typical for it to involve someone else's property, equipment or even one of your staff. It's important to build a liability programme that covers your business properly. As an example, covers can be extended for underground services (important for civil and drainage contractors) and for goods on hook (important for crane operators).
What to Look for in Picking an Insurance Broker
Choosing to work with a Broker will help ensure you're getting the right advice for your business. They're your key point of contact and help select the Insurer and coverage for your gear. To select a Broker to work with look at:
- Claims experience - the proof is in the pudding; ask for references and examples
- Insurer access - select a partner that works with more than one insurer. Preferably select a Broker with access to specialist Insurers for you
- Broker knowledge - not having to up skill your Broker about the model you just bought is a good sign