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Covering unique risks and exposures

Covering unique risks and exposures

The construction industry operates in one of the most dynamic and hazardous work environments, and while there are numerous factors behind construction site claims, cranes are involved in a number those events. Jan Arreza reports.

The basic engineering principles used in the construction of cranes involve the full spectrum of both mechanical and structural design, and while cranes share a common goal – the lifting and lowering of loads – the types and uses of cranes fall into a wide array of applications.

These uses are subject to a number of environmental conditions and external forces, which include geographical location, terrain, wind, weather, frequency of use and the operator’s experience and skill level.

According to Stan Alexandropoulos, Underwriting Agencies of Australia (UAA) Chief Operating Officer, Regional Manager East & New Zealand, the unique exposures that cranes and lifting equipment face means covering the sector is not a job for everybody.

“When there are claims with cranes, they are usually high severity claims such as high-end property damage and personal injury, so you need a very specialised product that identifies those exposures and makes sure that they are actually being covered and the insured’s business is protected,” Alexandropoulos said.

“We’ve got a very comprehensive policy called the Industrial Special Plant (ISP) policy, which has been developed specifically for cranes and lifting equipment, and we’ve developed it over the years to cover the exposures for not only cranes, but also all other types of plant and equipment as well.”

UAA, an underwriting agency for mobile plant and construction equipment, has seven sections in its ISP policy, which cover the different exposures associated with the equipment.

The first section is Damage cover, where UAA will indemnify the insured against damage to a machine that occurs within the territorial limits and during the period of insurance.

“It’s what we call an all risks policy, which pays for the crane to be repaired or replaced depending on the severity of the damage, while also covering other exposures likes theft and malicious damage – basically, if it is not listed as an exclusion in our policy then it is covered,” Alexandropoulos explained.

Under Section two – Hired-in Plant cover – UAA will indemnify the insured against liability to the owner arising from damage to a machine hired by the insured that occurs within the territorial limits, during the period of insurance, during the period of hire, and while the machine is in the physical possession and control of the insured.

“If the insured hires equipment in from an equipment hire company, we will cover it even though they don’t own it, because these places require them to have some sort of insurance cover in place when their equipment is hired,” Alexandropoulos said.

“In most cases, equipment hire companies will try and sell their own insurance cover (damage waiver), which can be quite basic and highly priced. What we do is offer an option for our clients to take out their own insurance cover, which usually ends up costing considerably less than what these hire companies try to charge for a broader cover. We also have the ability to offer an annual blanket hired-in plant coverage which removes the need for the insured to notify their broker every time they hire something therefore reducing any gaps in cover.”

The third section, Additional Benefits cover, covers things like damage to lifted goods, multiple crane operations, recovery costs and extra costs of reinstatement, new vehicle replacement, employee’s property damage and emergency service charges, to name few.

Turning to section four, Financial Protection cover, UAA indemnifies the insured against consequential loss that occurs during the indemnity period if damage to or breakdown damage (if breakdown section is taken) in a machine occurs within the territorial limits and if it causes interruption during the period of insurance.

“We cover things like loss of revenue associated with a piece of equipment in the event that the piece of equipment is damaged and the client loses revenue because they are not working,” Alexandropoulos detailed.

“We can also cover exposures such as additional increased costs of working in the event of a claim, like the costs associated with hiring another piece of equipment in to do the job. That is costing the insured more money so we will cover those costs for them.

“A lot of the equipment we insure is expensive, which usually means that the equipment is financed, so we will also cover their monthly finance costs in the event of a claim while it is not working.”

Section five is Breakdown cover, which is where the insurer will indemnify the insured against breakdown damage that occurs in a machine within the territorial limits and during the period of the insurance.

Meanwhile, in section six, Road Risk cover, UAA will indemnify the insured against legal liability for personal injury or property damage first occurring during the period of insurance, and caused by an occurrence within the territorial limits arising from using, operating or towing a road vehicle primarily as a vehicle in connection with the business.

Finally, in section seven – Broadform Liability cover – the insurer will indemnify the insured against legal liability for personal injury, property damage or advertising injury first occurring during the period of insurance, and caused by an occurrence in connection with the business.

“It’s a public liability policy that covers the declared activities of our client, and that is the full business activities of our clients, not exposures and claims associated with the cranes and machinery only,” Alexandropoulos said.

“For example, if the cranes were to fall over on a building and our insured was deemed to be negligent, we will cover the damages to the building, as well as any third party personal injuries that may occur in the incident.”

Alexandropoulos also noted that the claims they deal with the most are more often than not related to human error.

“Cranes these days, particularly the newer ones, are all very high tech – they’ve all got sophisticated safety mechanisms such as alarms and cut-off switches, which pretty much protects them from most situations, so we still find human error to be the most common cause of a claim,” Alexandropoulos said, adding that while mistakes do happen, the number of incidences have reduced as crane operators and the industry in general are more professional and companies are increasingly training and hiring more qualified and experienced operators. Either way, UAA has your back.

“We have very specialised local claims teams who are experienced in crane accidents and when a crane does fall over or there is an issue with a crane, we’re quick to appoint the right assessor and repairer, which is very important,” he said.

“We don’t have in-house assessors or repairers, they are all third party, but we go out and recruit them based on competency on different types of equipment. They are specialists in these pieces of equipment.”

Alexandropoulos also stressed the importance of appointing the right assessor and repairer right off the bat in order to get the process off to the best start possible, so that the crane can get back up and operating and making money for the owner as soon as possible.

“So, it is really worthwhile for our clients to have the right coverage, the right service and expertise, and get their crane repaired properly and have it up and running and making money as soon as possible,” Alexandropoulos concludes.

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