Mobile plant and equipment (MPE) represent an enormous investment for contractors and businesses making it imperative to get insurance coverage right. To do that, owners need to be able to identify key risks to safeguard against, understand mitigation expectations and know how listing equipment affects claims.
Types of operations that need MPE insurance cover
Mobile-plant insurance policies cater to a broad range of occupations related to six core industries:
- owner-operators
- earthmoving and civil contractors
- quarrying and mining operations
- the plant hire industry
- construction
- farming and agriculture
Geographical location may also dictate what primary market plant and equipment are being used in, but the common denominator is material handling and movement.
However, mobile plant risks differ from static assets in terms of location, site sharing and exposure to theft and other threats. How you approach managing these risks will be of interest to MPE insurers.
The five main insurable risks MPE operators face
1. Theft and vandalism — How to mitigate risks to mobile plant and equipment
Machinery can often be left on site overnight, over weekends or for extended periods of time which may make your plant and equipment the target of theft or vandalism. Fuel theft is another risk consideration.
Mitigation measures to consider
Grouping machines in one area, such as a locked compound, where possible or otherwise removing items from visible line of sight, can be augmented by using factory-installed GPS trackers or installing them as an add-on, fitting vandal protection mechanisms such as window guards and site surveillance, cameras and alarm detection systems.
2. Rollover and tipping — Operator safety is the priority
Trucks, excavators, bulldozers and graders can roll over in challenging terrain or weather conditions or due to lack of operator experience. The expense of repairs is considerable and the risk to life is paramount.
Mitigation measures to consider
Some types of equipment may be suitable for rollover protection structure (ROP) installation designed to protect the operator in the event of a rollover. Implementing strict safety protocols is also important. Many of these machines weigh more than a prime mover.
3. Fire — Prevention strategies are key
Plant and equipment catching fire tends to stem from two causes, according to claims data — a build-up of debris or mechanical issues that expose wiring or result in oil spillage onto a hot surface, for example.
Mitigation measures to consider
Routine cleaning prevents trapped material from drying out and becoming combustible and following the original equipment manufacturer machinery maintenance guidelines are simple methods of counteracting fire risks. Some industries, such as forestry and mining, require owners to have fire suppressions systems fitted to the machine.
4. Natural disasters — Extreme weather strategies
Bushfires, flooding and cyclones are all common events in different parts of the country that may involve secondary perils such as falling trees or downed power lines. Responding promptly to weather warnings allows operators to leave hazard areas early.
Mitigation measures to consider
If possible, move machinery away from the area under threat and clear of flammable material, including trees and bushland.
5. Lightning — Hidden damage potential
Lightning strikes can generate more than 100 million volts of electricity, with the path of the arc creating both external and internal damage to machinery. Computers may fail, wiring can be burned out, sensors and relays may be damaged. Also, the soft metal components of engines may be affected without the damage being immediately visible.
Mitigation measures to consider
To avoid further damage and threat to operators it may be necessary to follow the lightning arc marks by stripping the machinery components down for inspection.
The importance of itemising add-on equipment for construction applications
Most businesses in the construction sector have multiple add-ons for all their machines, such as drill rigs, skid steers and backhoes, for a range of various activities. It gives them the diversity to perform many tasks without having to invest in different pieces of machinery — but they are intrinsically portable.
Theft of these items could add up to substantial losses well more than standard policy limits so it is imperative to note these add-ons and their replacement value individually on the plant and equipment policy schedule.
Classifying your add-on MPE items correctly
For construction contractors and businesses how you list the attachments, accessories and modifications for your larger pieces of mobile equipment can make a material difference to receiving the replacement value if they are damaged and the speed at which you can resume work.
That means that these supplementary items need to be accurately identified and insured for what it would cost to replace them today. Keeping receipts for the purchase of add-on items is advisable.
For the purposes of mobile plant and equipment insurance, accessories are items permanently attached to the machine, like onboard GPS systems, confluent or hammer piping and automatic fire suppression, to name a few examples.
Items that can be removed from the machine and swapped out according to the work application required, like replacing a bucket with a rock hammer, are attachments.
When an item of equipment can be transformed completely, by removing a dump tray and replacing it with a water tank, for example, this is referred to as a modification.
Common MPE add-on complexity example
How Gallagher can help
Protecting your business assets through proactive risk management is likely to be viewed favourably by potential insurers — but accurately listing add-on items and their replacement value is essential to achieving a positive outcome. This is where Gallagher experts can help identify how to ensure your insurance cover provides the protection that you need.
