Plant Policy Options
Agreed Value (AV)
Basis for settlement can be amended to Agreed Value, subject to provision of valuations from an accredited valuer. A new valuation is required at each renewal.
Appreciation in Machine Value (AMV)
There are several things which may cause the value of a machine to increase during the period of insurance. Eg. shortage of supply, currency fluctuation, increase in import duties or other taxes etc. This option allows the Insured to provide for such increase of up to 25%.
Equity Protection (EP)
This is similar to the FGP but is to cover losses by the Insured due to finance pay-out figures eating into their equity. The following example probably best explains the option:
Operator bought a $205,000 excavator, paid $40,000 himself and financed the balance of $165,000. Clearly, the sum insured is required to be $205,000 with no reason for FGP to be taken. However, checking with the financier revealed that, if the unit were written off in the first couple of months, the pay-out figure would be $196,000. After deducting this from the S.I. the client would receive the $9,000 balance (less excess) - a loss of $31,000 on his original equity. This option (EP) covers this loss with a limit of 20% of the value of the machine and an excess of 10% of the gap.
Extended Dry Hire (EDH)
The old style dry hire endorsement (which is a standard inclusion in our policy) was designed to protect the owner/insured but not the hirer. It is conditional on hire conditions making the hirer responsible for loss so, in the event of a claim while on dry hire, the Insured is indemnified and the Insurer has subrogation rights against the hirer.
Many hirers' conditions contain damage waiver clauses which may breach policy conditions and the Trade Practices Act. Also, if the owner charges for a damage waiver, it is possible that they are breaching the Insurance Contracts Act and various State stamp duty regulations. Note: A recent ruling by APRA indicates that damage waivers will not be construed as "insurance" but there is a distinct chance that some of the wordings in damage waivers may render this ruling in-effective eg. Some of them actually use the word "insurance", some use "excess waiver" etc.
This option is designed to extend the protection under the policy to the hirer, and allow the Insured to recoup part of his premium costs, without breaching any of the above-mentioned laws, regulations or conditions.
Finance Gap Payment (FGP)
Cover is provided under this endorsement, in the event of a total loss, for the gap between the market value and the actual amount owed to a finance company provided the gap is not more than 20% of the market value. Naturally it does not include any arrears or balloon payments.
Finance Payment Protection (FPP)
In certain circumstances (eg. Non-availability of replacement machines) the SHC option may not provide viable cover so the underwriters can offer the alternative of cover for regular finance payments for the period during which the plant is being repaired or replaced. Subject to 14 day franchise/excess 10% of claim.
Loss of Revenue
Under certain circumstances the Underwriters will consider the inclusion of a special clause for revenue loss resulting from damage to an insured unit for which indemnity is granted under the policy.
Multi Lift (ML)
This is the sharing of a load by two or more lifting devices. Cover is dependant on compliance with the following two conditions (which are also almost universally adopted OHS/WHS safety standards).
1. The safe working load of each unit to be 25% in excess of their calculated shares of the load - eg. Crane capable of lifting 20 tonne at given radius and boom length. For dual lift at that radius and boom length the maximum for his share of the load is 16 tonne.
Note: Crane code or local workplace Health and Safety regulations may require a greater safety margin for more than 2 cranes. Compliance with such statutory regulations is a policy condition.
Eg. May well be:
| No. of Cranes |
Reduction of safe load |
| 2 |
20% |
| 3 |
30% |
| 4 |
40% |
2. A competent person must be appointed to supervise the lift and must be in a position to maintain permanent contact with each operator.
Note: For lift involving more than 3 machines, certain additional conditions apply - refer to policy wording.
Ongoing Hire Costs (OHC)
When contractors dry hire in plant the hire conditions generally stipulate hire costs will continue until return of the plant in the same condition (except for fair wear and tear) as when delivered to the hirer. This extension covers such ongoing hire costs to a limit of $50,000 with a seven day excess. It can also be adopted by a contractor dry hiring plant out, to cover hire charges owed to him - in many such cases this is paired with EDH.
Substitute Hire Costs (SHC)
Quite often the lack of availability of parts (particularly for older, imported or specialised machines) or the sheer magnitude of the damage can cause lengthy delays in getting the plant back to work. This can have a disastrous effect on the Insured's business and has, in fact, caused some businesses to fold.
This option allows the Contractor to hire in a replacement unit and continue running the business. The insured is responsible for the first seven (7) days following the loss and the limit of indemnity is then $50,000 or 3 months from the date of loss, or as otherwise specified. Before taking this option it is obviously wise for the Contractor to ascertain the availability of a replacement unit. It would be silly to pay for the option and then not be able to locate a replacement unit.
Underground Risk (UR)
Underwriters will, under certain circumstances, extend policy to cover plant operating underground. This will generally only be available for "hard rock" mines.
Unintentional/Non-Deliberate Overload (UNO)
In years gone by most Insurers excluded "deliberate overload" or "knowingly overloaded" etc, only to find it almost impossible to prove that such was the case even in the event of extreme operator negligence or carelessness. This meant that these Insurers were forced to pay claims for actions they had not intended to cover - a very expensive lesson. The modern trend is to totally exclude overload but make available an option for "unintentional/non-deliberate overload". This has the effect of bringing to the operator's attention the fact that he will be held responsible for his actions. In the event of damage due to overload the onus is on the Insured to show that a prudent operator could not have reasonably expected such overload to occur.
Eg.
- Head Contractor advised Insured to hold the weight of a supposedly empty tank weighing 1 tonne, while the legs were cut from under it, to enable shifting. The tank turned out to be full and weighed over 5 tonne. Crane sustained damage as a result of this overload.
- Concrete panel lifted within correct radius. Gust of wind blows load outside radius and causes crane to topple.
|
