How much cover should you get, and what do you need to look out for? Dave Bullard breaks it down for you.
Having heavy equipment stolen or damaged can be devastating for business owners. However, many farmers, contractors and fleet owners continue to find themselves in a difficult position by not having appropriate or adequate plant and equipment insurance cover.
It’s useful to note that while heavy machinery can be insured separately, it is commonly insured as part of a package tailored to your business.
A farm insurance package, for example, can include any or all of the following: farm property; hay, grain and livestock; heavy machinery; fire cover (for both inanimate and living assets); domestic property and contents; personal accident and sickness; farm and motor vehicles; working dogs; business interruption; business liability; and road transit.
Use a trusted broker – like QPF Finance
The Insurance Council of Australia (ICA) recommends speaking with an insurance broker who is familiar with your needs and the industry you operate in.
“They will be well equipped to help the customer with a risk assessment and their insurance needs,” the ICA says. “The broker can develop an appropriate mix of insurance products for machinery, equipment, buildings and other assets and can also consider household and motor vehicle cover.”
Our team can help structure broader business insurance packages to ensure your business assets are properly protected.
Think about the cover you need
Machinery can be covered for a wide range of risks including natural hazards and other forms of loss such as theft. You should also consider protection for breakdowns and accidents such as hitting power lines or damaging property.
The scope of cover is probably the most important aspect of your insurance policy.
Consider these questions:
- Does your policy cover incidents such as fire, explosion, theft, fraud and vandalism?
- Does it cover future damage caused by continuous operation or while equipment is transported on the road?
- Can you amend the policy and add other items later if required?
Make sure you obtain cover that reflects the real value of your equipment. If you own a fleet, your broker or insurer may also provide guidance on group insurance options.
Read and understand the fine print
According to business.gov.au, insurance contracts contain terms and conditions that must be met before cover applies.
These terms, which should be included within your Product Disclosure Statement (PDS), may include:
- Conditions of cover, including servicing requirements and renewal periods.
- How compensation is paid, such as agreed value, market value or a percentage of market value.
- Coverage limits including annual limits, lifetime limits and claim limits.
Business.gov.au advises reading your PDS carefully before entering into any insurance agreement and paying close attention to what is and isn’t covered.
Some events may also be optional extras requiring additional cover.
Check your machines
If buying farm equipment second-hand, check documentation carefully to ensure you insure the correct make and model. You should also review repair history and ownership records.
Don’t forget to secure maintenance records and supporting documentation for the equipment.
You should also consider public liability cover and protection against third-party property damage.
Secure your equipment
Heavy equipment is commonly targeted by theft, so ensure you take appropriate steps to protect your assets.
Maintain and operate machinery appropriately and ensure licensing laws, building rules and regulations are followed. Claims arising from illegal or improper use may not be covered.
Review your policy
While reviewing insurance may not be the most exciting task, it’s important to regularly review your policy and make adjustments as your circumstances change.
Review your cover annually and ensure new plant, equipment, machinery or upgrades are reflected in your policy.
Think before you lend
A word of warning about doing favours for mates — some insurance policies may only provide cover if equipment is being used on your own property or under contracted work arrangements.
If you lend machinery to someone else, you could unknowingly affect cover for theft, vandalism or damage claims.
You should also be aware of potential third-party liability exposure if someone becomes injured while using your equipment.
Before lending machinery, speak with your broker or insurer.
In summary
Top tips for insuring heavy machinery:
- Speak with a broker experienced in heavy machinery and primary production industries.
- If buying second-hand equipment, verify make, model and documentation.
- Review repair and ownership history.
- Keep records and maintenance paperwork.
- Consider liability protection and third-party damage cover.
- Determine whether agreed value or market value cover is most appropriate.
- Protect machinery against theft.
- Maintain equipment properly.
- Read and understand your Product Disclosure Statement.
- Review your cover annually.
- Ensure machinery is used legally and appropriately.
