Insurance for When You Buy or Rent Construction Equipment
October 7, 2019
Here at C&S, we don’t like to start insurance conversations by claiming how much money we can save people. We think comprehensive coverage, along with solid loss control planning, is the first order of business. That said, if you buy or rent construction equipment, and your agent isn’t especially hands-on about inventorying what you have, then yeah… we can save you money. Here’s a closer look at the issues surrounding insurance for contractors’ equipment, brought to you via Q&A with the brilliant, Jessica Morin:
What are some of the common mistakes business owners make when it comes to insuring expensive equipment?
One big oversight we often see is business owners who aren’t aware if they’re getting Actual Cash Value (ACV) or Replacement Cost (RC) valuation from their policy. There’s a major difference, in terms of payout, if a claim occurs. By the way, most carriers will offer businesses the RC or Replacement Cost value for equipment that is 5 years old or newer… but your agent has to ask for it!
Equipment values should also be adjusted annually to account for depreciation on older units. (e.g. We’ve helped owners who were getting charged to insure a $100k forklift, year after year, but the unit was only worth $50k, because it was 7 years old!) A lot of times, owners are missing these mistakes, too.
Is equipment automatically included as part of a BOP or other ‘standard’ business property coverage?
Some carriers will include it within a package policy, but most will write it mono-line on its own policy. Contractors equipment is covered under what we call “Inland Marine” insurance. This is insurance meant to cover products, materials, or equipment on land or transported on land. Equipment typically moves around for operations, so this insurance is written to accommodate that movement (sometimes referenced as “floater” policies.) Business Personal Property is typically covered on a BOP policy, which includes business contents (non-equipment) such as furniture, computers, office supplies, ext. at a specified location.
Under what loss circumstances is equipment typically covered?
Theft, fire, wind, hail, water, and user damage are all covered. HOWEVER, normal wear & tear is not. Similar to auto insurance, if the engine blows, or you need a new ignition, this is not covered by equipment insurance.
Does equipment need to be individually itemized or ‘scheduled’? Does it depend on what type of equipment it is?
Inland Marine policies typically provide an “unscheduled items” limit and/or “small tools” limit, which is meant to cover small items and act as a catch-all for items that have not been individually itemized or valued. Carriers typically keep these limits low, however. For big items (valued at $2,500/$5,000 or higher), I would recommend scheduling individually.
Do companies need to call their agent every time they buy or rent construction equipment?
Yes, although some policies do provide a newly purchased equipment limit for the short time frame. Usually you have 90 days as a kind of grace period wherein you are covered even if you haven’t reported new equipment to your agent. But you should call as soon as possible.
Are some insurance carriers better at covering equipment than others (e.g. more flexible, better rates, focused on specific industries so they are familiar with types of equipment involved?)
Yes! Some carriers have a broader appetite and are more competitive in the space than others. This is why it’s important to work with an agent who has access to many different markets and who has built solid relationships with a variety of carriers. If you’re not testing the market regularly (i.e. going out to bid every three years or so), you may be missing out on premium savings, more comprehensive coverage, and lots more–due to your current agent’s limited access.
Who’s a good agent to call for construction equipment insurance?
We may be biased, but you really can’t go wrong by calling C&S when you buy or rent construction equipment. Our commercial lines team specializes in strategic coverage for construction companies, utility contractors and artisan contractors. We’re experts in MA workers’ compensation insurance, too. call us at 508.339.2951 or take a moment to meet our team.