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What is contractor plant and machinery insurance?
We started our business insurance series of articles with Fire & Loss of profits and went immediately to the liability section, and the contractor's all risk sections. Imagine a building site in front of you and look at all the machinery on site. It can vary from small Bobcats to front-end loaders, back-actor cranes bulldozers. I like to refer to them as Yellow machinery.
The machines and the liability are excluded in other sections and must be insured separately. The cover available on the plant all risks can include the following
Machinery Insurance can provide cover for:
Damage
Theft
Wet Hire or Dry Hire
Machinery Breakdown
Driving risk whilst on Public Road
Liability whilst being used
Loss of Revenue
Lease Payment Protection
Agreed Value
Liability coverage for all business activities
Plant All Risks
The cover is also known as plant all risk insurance cover intended to cover all types of construction plant, mobile yellow metal plant such as Graders, TLBs, Excavators and non-mobile construction equipment such as scaffolding, generators and small tools, typically used on construction and civil engineering projects ranging from residential to commercial to extensive infrastructure.
Risk insurance covers
Your plant is vulnerable to several problems, such as breakdowns, vandalism and theft. (Breakdown is not insured)
Missing a project deadline can be deadly for your bottom line and reputation.
Plant All Risk Insurance covers you for loss of, or damage to, construction plant and equipment whilst in storage, transit, on the contract site or being used as a tool of the trade. In South Africa, adding "Saria", or political riot, is essential.
insured plant
In a nutshell, Plant all risk insurance covers you for the loss of, and damage to, plant and equipment, whether you own it or it's hired-in.
Legal liability
Public liability for plant all risk covers losses and damages caused by your insured plant all risk items, whether you own them or hire them in or out.
Road risk liability for plant all risk covers any accident caused by, through, or in connection with the vehicles stated on your policy schedule.
This includes the legal liability, under the terms of their hiring agreement, to pay for loss or damage caused to the hired-in plant and the cost of continuing hire charges.
Significant features and benefits:
The owned plant is covered throughout the limited territorial area, including transit (other than by sea or air).
Hired-in plant cover on a legal liability basis
Own plant
Contractors plant insurance
The plant covers the insured's plant and equipment on an 'All Risks' basis. It can also protect their legal liability under terms of their hiring agreement to pay for loss or damage caused to the hired-in plant and the cost of continuing hire charges. Significant features and benefits:
The owned plant is covered throughout the territorial limits as stated on the schedule.
Contractors plant policy
It is available from several insurance companies. You can decide to go direct or make use of a broker.
The product is structured very similarly to a contractor all-risk policy and is underwritten by what the insurance industry refers to as the engineering department. Because of the value of equipment, the re-insurance companies get involved in the quoting process. For a quote, you need to fill out a questionnaire to indicate your needs to the insurer. Take care when filling out the documents. Some machines are designed to do arduous work and can take much punishment, but accidents happen.
Insurance products
Contractors plant or plant all risk is available with various insurers, and the product is advice-driven.
Surrounding property
Surrounding the property is any property located on or adjacent to the construction site, held in custody or controlled by the contractor. It's important to note that cover does not apply to surrounding property on construction, plant, equipment and erection machinery unless you specifically applied for it to be covered.
There are three different properties on a building site. The actual property where the contractor is working.
The surrounding property in the same area and the third-party property could be the building next door, a car in the street, or property belonging to other contractors. The contractor can protect himself by ensuring an agreement between himself and his client, ensuring you know and understand what is in the tender document and taking care when filling out the questionnaire required by the insurance company.
You are not covered automatically.
If you are taking on the services of a contractor who will hire out the machine with an operator, ensure you are covered.
For example, if you want alterations and need a TLB to do some earthmoving work, you assume your insurance on your house will cover you for damages to your existing structure. Specific exclusion on your homeowner's policy can you see how easy a mistake can happen.
The risk could be high with handshake deals. Beware!
Tower cranes
The plant can be expensive, so many construction companies hire certain items, primarily those that are only used occasionally for specific contracts. Typical items hired by a contractor could include dumpers, excavators, mobile cranes, and tower cranes.
Material loss or damage to plant and equipment: the section covers loss of or damage to the insured items stated on your policy schedule, which happens during the period of insurance and within the territorial limits, provided that it does not exclude the cause of the loss or damage.
Hire-in costs following the loss of, or damage to, items insured under 'Material loss or damage to your plant and equipment and 'Plant hired-in during the ordinary course of business.
Ito YouTubemmobilised plant
Recovery costs for immobilised plant and equipment up to a limit stated in the policy section. This damage happens more often than you think. You need to go on YouTube and see how Yellow machines can become stuck.
Take action
Albert Schuurman
I started an online course on financial freedom, explaining the difference between retirement and financial freedom. Business insurance is a crucial part of your financial freedom plan.
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