Various types of insurance will protect construction company owners from the risks associated with work projects. Equipment, heavy machines, and tools are critical to overall operations. Ensuring these are reliable determines whether those projects will be successful.
The vital nature of these assets means they will typically need to be insured individually, which is why different equipment insurance is required. We’ll go over this coverage and the costs of the policies.
What Is Construction Machinery Coverage
Construction machinery policies help contractors protect their businesses from considerable financial loss or potential bankruptcy due to equipment loss or damage.
The coverage referred to as “equipment and tools insurance” or “contractor’s equipment insurance” was developed to provide coverage in instances when general liability won’t cover a specific circumstance. These cases usually involve theft or if mobile machines and tools are destroyed or damaged.
Most construction companies use coverage for their expensive heavy equipment and implements or attachments, but it can also be handy for small machinery like hand tools, generators, and PPE—personal protective equipment—equipment that goes with a contractor from one site to the next. Go here for more examples of PPEs.
Without this coverage, these pieces of equipment would be vulnerable to risks associated with company projects and jeopardize their success. Damage or destruction can lead to substantial financial loss.
Coverage With Equipment Insurance
Most equipment carriers allow you to decide how to protect your machinery. Typically, the perils involved with coverage include destruction or damage related to vandalism, accident, or natural disasters, and theft.
The providers will also provide protection against damage sustained to machines by uninsured or underinsured subcontractors operating the equipment. You can further obtain policies to cover accidental damage to utility lines, including gas, electricity, sewage lines, water, and adjacent properties.
A host of construction machinery policies are available to ensure your business operations run smoothly with as little downtime as possible. The priority is to compare providers with whom you discuss your specific needs and the associated risks to your business.
The Cost for Equipment Insurance Policies
Considering the variables, including the risks associated with your company, the condition of the equipment, and the various options available, insurance policy prices will depend on the carrier rates and your decisions regarding deductibles and coverage.
Reputable insurers like those you’ll find by visiting fastmachineryinsurance.com.au use the following determinants to calculate the premiums:
- The construction company’s location
- Type of machinery to be insured
- The company’s use of the machinery
- The equipment value
- The protections in place for the machinery
Each company’s rate will differ based on these variables and the deductible and coverage each chooses; it’s not one set or flat rate across the board.
The insurance deductible is the amount a construction business will spend before the carrier pays for a claim filed. An insurance provider imposes deductibles to ensure the client carries some of the weight when filing a claim to repair or replace machinery if it is stolen or damaged.
Policies with lower deductibles will have higher rates. When there’s a higher deductible, the premiums will be lower. If you were to research for the best rough estimate for insurance costs considering the factors provided, it could range as great as $1200 for a machine valued at $100,000, an estimate.
Tips When Purchasing a Machinery Policy
When purchasing construction equipment insurance, the first step is to assess the risks the machinery faces routinely in order to select policies with adequate coverage for these risks.
When comparing policies, you’ll need to become familiar with the differences between coverage types like schedule and blanket and reimbursement types like replacement cost value and actual cash value since these decisions will impact the policy.
Blanket coverage refers to any items in the policy defined as “covered property,” including machinery and tools.
Scheduled coverage, on the other hand, dictates that insured items need to have a schedule attached to the policy where the insured machinery will be specified and coverage for only that equipment will be applied. Many companies use a combination of these for a cost-efficient approach.
When comparing carriers, you will provide the provider with a machine and tool list showing the manufacture date, serial and model number, and a value estimate.
The carrier will calculate a rate and provide you with terms and conditions to help you decide which coverage or combination is better, considering your risks. When buying insurance, the next thing to decide is whether the plan is written as RCV- replacement cost value or ACV- actual cash value.
The primary difference is that ACV will account for machine repairs and replacement but won’t compensate for the depreciation from the time the policy was taken until the loss was incurred. Carriers typically only grant RCV for equipment less than five years old.
Contractors would benefit most from RCV if available. They should monitor their plans and reinsure equipment when it needs to fall into the ACV category. Insurers also recommend considering additional machinery coverage for rented and leased equipment, depending on the risks associated with your business.
Further, business interruption coverage should be considered if there’s downtime due to equipment failure. The best way to lower prices is to regularly monitor policies and combine them with the same carrier if savings are possible.
Final Thought
As a construction company owner or manager, it’s critical to consider insuring the business equipment and tools to protect the company from substantial financial loss if a peril were an accident or incident resulting in damage, destruction, or loss.
The cost of the coverage will depend on many variables, including the equipment’s condition and value, the risks associated with how it’s used, the deductible and coverage you choose, and on. These will help the carrier calculate the final rate and will be unique to each company.
With regular monitoring of your policies, you might be able to lower your price point by combining coverage using the same carrier. The priority is making sure you’re not adequately covered for the risks presented by your company projects.