Machinery Insurance – What Cover Do You Actually Need?
Machinery insurance has a wide variety of applications however, generally speaking, most machinery can be covered by ‘Contract Plant’ insurance cover which is insurance specifically designed to cover the application and use of machinery and plant; both mobile and stationary. 

Some machinery owner/operators insure their machinery under a ‘Commercial Motor Vehicle‘ insurance policy which is not an ideal cover, especially where the machinery or plant is operated off-road in a isolated and/or rough terrain environment - importantly commercial motor vehicle insurance cover excludes off-road usage and is more applicable to insuring a truck and other similar types of machinery operating on roads.

Why Contract Plant Insurance – What’s the Difference?
Starting at the very basics, mobile machinery [anything from a bobcat to an excavator and the like] more often than not operate in an off-road environment which means, under a normal Commercial Motor Vehicle insurance policy the machinery would likely be excluded from claims caused whilst in an off-road environment; imagine that, not being covered for the very type of work that makes up a majority of the time spent using the machinery. 

One of the other most important factors differentiating Contract Plant insurance from Commercial Motor Vehicle insurance is the ‘poof of damage provisions’ which is an extremely important part of machinery insurance; for example:-

• Take a scenario whereby an earthmover slides down the side of an excavated pit, settling in such a way that it becomes bogged and trapped amongst debris, soft mud and sliding earth making recovery particularly difficult and expensive.  However, in this scenario, there is no physical damage to the machine other than a few scratches not worth the excess or the deductible on the insurance policy of perhaps $500.00.  Under a Commercial Motor Vehicle insurance policy, you won’t be able to claim the removal costs of the earthmover whereas, under the terms of Contract Plant insurance cover you can make a claim and let’s face it, the cost of pulling out an excavator from a deep pit in difficult circumstances requiring a crane and other machinery is not going to be cheap.

There are lots of differences which we shall canvas throughout this information document; suffice to say Contract Plant insurance is specifically designed for machinery and plant whereas Commercial Motor Vehicle insurance is not.

So why do some people insure their Machinery and Plant under a Commercial Motor Vehicle Insurance policy?
Because it’s cheap as chips in comparison to getting the right cover; but its not cheap when the claim isn’t paid and you’re up for a lawyer and perhaps even a major dispute which could cost you a fortune in court – not to mention your machine laying idle unrepaired in a damaged state.

More often than not, machinery and plant owners phoning around looking for the cheapest deal are sold the wrong policy when dealing direct with an insurance company, because you’re limited to what they tell you – more often than not, machinery owner/operators insure their trucks and other equipment for third party and comprehensive cover through one of the ‘household name’ insurance companies and while that might be okay to some degree for that pretty typical type of insurance; its not the same for machinery insurance especially when dealing with limited trained call centre personnel, there’s often a misunderstanding of the type of work an excavator and other mobile machinery will be undertaking. [sometimes when the call centre personnel are based overseas they might not entirely understand the types of cover needed for machinery insurance].

Thus, it is important to have an independent broker such as IronGuard manage your machinery insurance requirements so as to ensure that you get the right cover at the right price every time.

Does Contract Plant cover include everything I need?
It can, depending on the scope and complexity of the work the machinery will be undertaking.  For instance, a Bobcat undertaking basic earthworks for a plumber or house builder will not require the extent of cover as would perhaps an Earthmover working on a mining site or forestry plantation. 

There are a number of options to consider including:-

• Road Liability – This is a specific addition to the standard cover if the machinery is being operated on the road at any particular time, including crossing roads or driving along roads to and from sites because, there are very specific laws and statutory requirements for use of vehicles on roads and without the necessary additional cover added into the policy then it may turn out that there is no cover for you at all.



• Agreed Value -v- Market Value – Most machinery insurance policies, whether or not they are for Contract Plant or Commercial Motor Vehicle, start as a basis of machinery value at market value ie. where the insurer will use industry statistics to determine a market value for the machinery to be insured.  Obviously, an older machine with a high usage history will be worth less than a similar machine with low usage thus, sometimes it is worth insuring for agreed value however, in any event the value will be affected by depreciation thus reducing the amount of dollar value cover.  Where agreed value is taken out there will usually be an additional premium. [usually only a small premium addition].



• Substitute Hire – Often when machinery is damaged, it will occur while using the machinery in the course of performing a contract.  Just because the machinery can’t be used, doesn’t mean to say the contact has to stop thus, with ‘Substitute Hire Clause’ you can nominate an amount of money to be covered by the policy to allow you to hire a substitute piece of machinery in order to continue with the contract obligations – this is an extremely important addition to Contract Plant cover and not usually available under a Commercial Motor Vehicle policy.



• Recovery Expenses [when there is no loss in respect of damage] – This applies to a unit or piece of machinery which becomes immobilised by a fortuitous event such as severe bogging which could cost several thousands of dollars to recover.  This is extremely important for mobile machinery and plant operating in rough terrain and difficult to access locations.  Without it, you’re on your own.

There are quite a number of ‘For Free Options’ available under certain underwriters policies and IronGuard, having the necessary experience and industry clout, will generally ensure the following extensions are included in the Contract Plant cover that our clients take out:-

• Dry Hire – meaning that if the machinery that you are hiring is damaged, that it will pay for the hire of other replacement machinery;



• Expediting Expenses – ensuring that claims are dealt with quickly in order to ensure that the operator is compensated without delay so as to be in a financial position to continue a contract;



• Damaged Windscreen Replacement – replacing a windscreen can be expensive and thus, we always try to get it included in a policy of cover;



• Protection and Removal – if the machinery is immobilised, this will pay for the cost of a security guard or other security measures to ensure the machinery’s safety and security while awaiting retrieval;



• Signwriting – where signwriting is damaged or vandalised or any other such thing like that, the cost of reinstating the signwriting is covered;



• Tyre Replacement – we all know how expensive tyres are thus, it is important where practical and available to have this cover included as a free option in the overall cover.

There are quite a number of other options available depending on the nature of the work to be undertaken by the machinery; thus, it’s our job to ensure you get the best deal and best cover in the market.

I’m required to sign a ‘Hold Harmless Agreement’ – What is that and can I be covered for it?
Often when undertaking a contract as a sub-contractor, the sub-contractor will be required to sign a ‘hold harmless agreement’ which basically holds harmless the head contractor for any negligence or claims arising out the sub-contractor’s actions. 

Let’s say for instance, the contractor directs you as an earthmover/operator to clear a fence line through bushland however, you get it wrong and knock over some protected trees and damage some infrastructure such as irrigation pipes or even electrical cables – while a claim might arise against a contractor, the contractor can then claim that they are held harmless as a result of your negligence and sue you directly, even though they may have misdirected you. 

Of course you can obtain insurance for the hold harmless section, as this is a standard sort of cover option available under the Contract Plant insurance, but not available under the Commercial Motor Vehicle policy.  Every contract is different thus, there are some hold harmless agreements that are just impossible to insure against – but we can in most cases.

It is essential therefore to make sure that hold harmless provisions are covered in your policy and do not serve as an exclusion so that you will end up footing the bill for someone else’s mistake. 

But Commercial Motor Vehicle Insurance is Half the Price!
A Commercial Motor Vehicle policy is certainly not the most appropriate way to cover machinery, plant or equipment because the policy is not designed to cover that type of risk.  While perhaps there are limited benefits, you will not be covered for the ‘full monty’ so to speak because when you start using the machinery off-road for excavation or any other activity like that, the Commercial Motor Vehicle insurance policy will exclude claims arising or occurring from that type of activity – the fact that the cover is significantly cheaper does mean that the cover is very limited – ‘pay peanuts and get a monkey’s cover’.