Construction plant and machinery faces a number of risks, and these risks are increased because construction sites are often in the open.
Equipment worth £70 million is stolen from construction sites each year at the moment. Vandalism at construction sites is also a serious issue. You can minimise the risk of theft and vandalism by increasing the security at your construction sites, but you cannot completely eliminate the risk.
Weather-related damage is also a risk when equipment is kept in the open. Again, you can minimise the risk by taking appropriate measures, but the simple fact is that, if equipment is on a construction site, it won’t be as safe as it would be if it was inside in a factory.
And although major advances have been made in recent years in terms of safety at construction sites, these sites are still hazardous environments and the risk of accidental damage to equipment is a very real risk.
Thankfully, you can get plant and machinery insurance against damage or theft to protect you against any unexpected losses, whether you own the equipment in question or have hired it in to use it on a project.
Contract works insurance
Plant and machinery is covered by a contract works insurance policy. This covers you if the equipment is accidentally damaged or stolen. It covers the equipment when it is on a construction site as well as when it is in transit.
The policy contains a limit. This is the maximum amount that the contract works insurer will pay in the event of a loss. This limit means that you do not need to specify what plant and machinery you have as long as its total value does not exceed the limit. The advantage of this is that if you hire an item, it is automatically covered.
There will usually be an excess. This is the amount that you need to contribute towards each claim. Often you can reduce your contract works insurance premium by agreeing to a higher excess, although obviously, that would mean that you would need to contribute a higher amount in the event that you had to make a claim.
The difference between owned & hired-in plant & machinery
Many contractors choose to hire in plant and machinery that they only need for a specific task rather than buying it because hiring the equipment in such a scenario is usually more cost effective. Whether you own the equipment or hire it, you still need to insure that equipment.
Often the hiring company will offer insurance to cover the equipment if it is damaged or stolen. However, taking the hirer’s insurance is not always the best option.
The hirer’s option often has more restrictive cover than a contract works policy provides. Accidental damage cover is often excluded, for instance. Also, by insuring hired-in plant and machinery yourself, you have more control over your cover.
Buying the hirer’s insurance can also be more expensive in the long term. Having an annual contract works policy that covers any plant and machinery that you hire throughout the year can work out much cheaper than buying insurance each and every time you hire an item.
If you use your own insurance to cover an item of plant or machinery, you will usually need to show evidence that you have insurance cover if you do not take the hirer’s insurance option. You can do this by showing the hirer your insurance policy documentation, or the hirer may ask your insurance provider to confirm that you have cover.
Continuing hiring charges
If you have hired in an item of plant or machinery, you will usually be responsible for paying any continuing hire charges even if the equipment has been damaged or stolen so it cannot be used.
A contract works policy will cover these continuing hire charges if you are legally liable to pay them.