It’s not uncommon for a contractor to have to hire in an item of plant for a job. No contractor will have every single item of plant that they need and it is usually more cost-effective to hire in an item of plant that will only be used once than it is to buy that item of plant.
However, the hirer will almost always insist that whoever is hiring the item of plant from them arranges insurance cover on it via a hired-in plant insurance policy. This insurance policy will cover the item of plant against losses due to theft or damage. It will also cover any continuing hire charges that the contractor is liable to pay under the hire contract.
Even if the hirer offers a damage waiver, it can still make sense to have your own insurance covering any construction plant that you hire.
Theft of plant
Plant worth £70 million is being stolen in the UK each year, and it’s estimated that when the associated costs of the thefts, including the disruption to construction projects and increased insurance premiums are taken into account, construction plant theft is costing the UK construction sector £800 million per year.
There are two reasons that the theft of construction plant is so common.
First, it’s easy to steal. Construction plant tends to be fairly portable because it’s designed to be easy to move it between sites. And construction sites aren’t usually as secure as a fully alarmed warehouse or factory, so stealing plant from a construction site is a lot easier to do.
Second, it’s easy to sell stolen construction plant as there’s a ready-made black market for it. A lot of construction plant theft is believed to be undertaken by organised criminal gangs who are often stealing plant to order with much of it being exported.
Hired-in plant insurance covers any hired-in plant against theft losses, although you should always check your policy to see whether there are any policy conditions that require certain minimum levels of security when the plant is on site. More expensive items of plant may need to be fitted with tracking devices, for instance.
Damage to plant
Construction sites are hazardous environments and so damage to plant is a real risk. The sites are also often in the open, so weather-related damage is a consideration.
A hired-in plant insurance policy will cover any damage to the plant that you have hired, although it will not cover that plant against mechanical breakdown.
Continuing hire charges
If any hired-in plant is damaged or stolen, you’ll usually be liable to continue paying the hire charges for the item in question, even if it is no longer available for use.
These continuing hire charges are covered by a hired-in plant insurance policy.
Items of plant in transit
As well as being at risk of loss or damage when it is on site, construction plant is at risk when it is in transit. Hired-in plant insurance covers the plant whether it is in transit or on site.
Own insurance v hirer’s waiver
Some hirers will offer you a waiver and many contractors will rely on that rather than buying their own insurance, but there are two reasons that this is not always the best option.
First, the hirer’s waiver may only cover a limited range of risks, and may not cover accidental damage to the plant. Having your own insurance may mean that you have more protection.
Second, it may be cheaper to insure any hired-in plant yourself, particularly if you are hiring plant on a regular basis. An annual policy that covers all of the plant that you hire during the year will usually work out cheaper than buying waivers from the hirer each time you hire anything.