When crane hire companies are faced with the prospect of lifting expensive loads it is important for them to comply with the correct and required levels of insurance to manage the project.
Crane hire companies are often approached to conduct lifts which are out of the ordinary. In some instances, this can involve lifting extremely sensitive weaponry for the Defence Forces or expensive medical machinery. In some cases, they have no idea what they are lifting.
George Grasso, global chief services officer for Underwriting Agencies of Australia (UAA), discusses the importance of understanding the nature and value of what you are lifting and the pitfalls if you don’t.
When a crane hire company is faced with the prospect of lifting expensive loads such as weaponry or important and valuable parts of a warship for the Defence Forces, it is important for them to comply with the correct and required levels of insurance to manage the project, says Grasso.
“Crane hire companies can find themselves in unique situations when it comes to these types of lifts, and as an underwriter, UAA wants to know about the types of tasks they are expected to execute, especially when they are moving and lifting loads such weaponry or explosives and any type of sensitive work in and around an airport and hospitals, for example,” he said.
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“UAA wants to know about these types of exposures because, depending on the level and depth of severity of the exposures, we will determine whether we are prepared to cover it or not. To make these decisions, we need to understand more about the tasks facing the client,” said Grasso.
UAA also recognises clients will find themselves in unique situations where the details of what they are lifting is confidential and they don’t actually know what they are lifting, says Grasso.
“We also understand there might be a confidentiality agreement and the crane hire business doesn’t actually know what they are lifting. The most important element of this scenario is the contract they have signed. We’ve said it many times, it all comes back to the detail in the contract a client agrees to.
“Whether the contract is with the Defence Forces, a Government Authority an airport, whoever it is, if the crane hire business is not going to be told what they are lifting and they are being advised what to lift and how to lift it, then any responsibility or any issue that occurs thereafter should be the responsibility of the Principle Contractor. That is how the contract should be drawn,” said Grasso.
“This way, it makes insurance brokers and underwriters like UAA more comfortable that the entity engaging the services of the crane hire business is taking the responsibility for the lift. In this instance, the major contractor engages the crane hire company, our client. The client then comes to UAA and says this is what we are lifting. We will ask to see the contract agreement between the client and the principle contractor and then decide if we are going to cover them for the work,” he said.
Grasso goes on to explain what happens if something goes wrong with a lift.
“In the scenario where something goes wrong, each case is examined, managed and reviewed on its own merits. There would need to be an investigation on what happened and where the responsibility lies. All of these factors need to be determined before indemnity can be considered,” he said.
Grasso also explains the importance for a crane hire business to ensure it has the right levels of insurance when it comes to conducting ‘every-day lifts’, which might put the crane close to its maximum capacities.
“There are a lot of items that clients lift including air conditioning units for example, which fall under our General Lifting of Goods Cover. We provide automatic cover for this in their policy. UAA generally cover goods up to a value of $250,000 automatically.
“If they are planning to lift anything more expensive such as an MRI scanning machine or other medical equipment for example, they certainly need to inform their broker so the broker can inform UAA. We then analyse the associated risks and we generally charge a bit more to cover the more expensive item.
“There is obviously an extra cost to get the additional cover, but this can make a huge difference when you are lifting more expensive items with values above the Sub Limit of the policy,” said Grasso.
It is a similar scenario when a crane hire business is lifting historic artifacts which could include priceless and irreplaceable vintage war planes, or cranes are moving expensive camera equipment around a film set,” says Grasso.
“It’s the same principle. We need to know what the value of the equipment or item being lifted. We then determine the appropriate risk and then the appropriate a premium. Generally speaking, crane hire businesses forward these costs onto their client as part of the cost for the lift,” he said.
Grasso explains what happens in a scenario where a crane hire business thinks they are automatically covered for a lift, they don’t approach their broker for specific cover, and something goes wrong and there is an incident.
“In this scenario it will depend who their insurance company is of course. But it may impact on indemnity being granted or indemnity might be limited to the Sub Limit of their insurance policy. For example, if the sub limit of their policy is $250,000 and the item is worth $1 million, and the loss is a total loss of the $1m, indemnity may only be for the Sub Limit of $250,000.
“The remainder of the value will have to be borne by the crane hire business or there could be a liability stoush between the crane hire business and their client. It can get very costly if you are not properly and fully covered for these types of lifts or you could end up in a costly legal battle. All this can be avoided by consulting with your insurance broker to triple check you are covered,” said Grasso.