HIRED IN PLANT INSURANCE
Hiring in plant and machinery can be the most cost-effective solution for many construction projects, as specialist machinery is often costly to buy and may not be required for long periods of time. As the hirer, in the event of loss or damage to plant which you have hired, you will be responsible for either the repair or replacements costs, as well as continuing hire charges until the either the repairs have been made or a replacement has been received.
When hiring in plant there will be hire conditions that must be adhered to, these detail the responsibilities of the hirer during the hire period. The most common conditions used by plant hire companies are the Construction and Plant Hire Association (CPA) and Hire Association Europe (HAE) conditions.
What is hired in plant insurance?
Hired in plant insurance will protect against unplanned costs relating to loss or damage of plant and machinery.
The term hired in plant refers to any items of hired equipment, machinery and tools. When you hire any machinery or equipment for your construction site, you are liable for any loss or damage that occurs.
Hired in plant insurance protects hired equipment and machinery on an indemnity basis (market value) and will generally cover items anywhere in the UK. Before releasing or delivering plant most hire companies will now require evidence of insurance.
How much does hired in plant insurance cost?
The premium will depend on a number of risk factors, primarily the estimated fees paid for hiring equipment and the maximum value required for any one claim and details of any previous claims.
Other factors will be taken into account so speak to one of our experienced brokers who will consider the needs of your business and advise the best solution both in terms of cover and cost.
Annual hired in plant insurance vs short term hired in plant insurance
Short term plant hire insurance can provide the most convenient and cost-effective solution for one-off projects where hired machinery and equipment will only be required for a short amount of time. Short term plant insurance will provide cover for all plant within the agreed territorial limits (generally UK wide, but wider cover can be arranged) for the period of the hire and until returned to the hire company.
Construction companies and contractors working on various construction projects will invariably find an annual hired in plant insurance policy more appropriate. Those opting for an annual policy should ensure their policy has appropriate cover limits for all projects undertaken during the policy period.
If you are unsure on the amount of cover needed, or which type of policy would provide better value and cover for your project, speak to one of our specialist brokers who can advise.
Own plant and machinery insurance
If plant and machinery is already owned by the company, then own plant and machinery insurance is advised. Own plant and machinery insurance protects against loss or damage of any plant owned by a business within the territorial limits of policy (usually UK wide including transit).
Own plant and machinery insurance will cover items on an indemnity basis, with some policies providing new-for-old replacement on items under 24 months old. Extensions for loss of hire income are also available with several specialist insurers. Cover provided is generally on an ‘all risks’ basis with minimal exclusions and policy conditions applying.
Other covers to consider
Contractors’ All Risks Insurance
When undertaking a construction project consideration should be given to several other insurances:
- Contract Works Insurance provides comprehensive cover for the works from commencement date through to completion with suitable provision for any maintenance period. In general cover will include fixed and unfixed materials on site as well as providing transit cover and in most cases off site storage. Options to extend cover to include cover for completed buildings are available and will be discussed with you to ensure that adequate cover beyond “completion” is in force.
- Advanced loss of profits or delay in start up cover provides financial protection in the event of an insured risk such as a fire or flooding causes a delay in completing a project.
- Latent Defects Insurance (also known as structural warranty insurance) can protect the owner against the cost of rectifying structural defects of the owned building. Cover must be purchased in advance and generally applies for 12 years following practical completion of the property for claims arising from faulty design, workmanship or material defects. Latent defects insurance is required by property developers, finance providers, new build contractors or others with a financial interest in the property, and cover can be purchased for both residential and commercial properties. Having cover in place can benefit the owner as it will allow for an easier sale of the property, as cover can continue to future owners of the building. In the event of a defect, negligence does not need to be proven (only the defect itself), allowing for a more straightforward claims process for rectification costs. Find out more about Latent Defects insurance here.
Public & Employers’ Liability
Most construction projects will require several types of liability insurance protection. These liabilities are often not covered by other policies (such as a Contractors’ All Risks policy) therefore a Combined Liability policy is recommended to insure Employers’, Public and Products Liability cover under a single policy.
- Employers’ Liability (EL) insurance with a minimum cover of £5m is a legal requirement for any UK business, although many policies offer a higher level of cover as standard, usually £10m. EL insurance is designed to protect the business from claims for injury or illness made by employees. Typically, this will cover any legal costs incurred and compensation awarded to the claimant.
- Public Liability insurance covers legal liability in respect of accidental physical injury or damage to property, arising from an insured’s business activities. Third-party claims are one of the most common claims made against contractors in the construction sector. Careful consideration should be given to ensuring the right level of Public Liability cover. Contract requirements often insist on minimum of £5m cover, but you may require more depending on your risk exposure. Cover is arranged to protect you against legal liability arising out of negligent acts or omissions but under some contracts notably JCT there may be a requirement for “non negligence” cover to be arranged. Such requirements will be confirmed in the contract documents and we can arrange this either with the Public Liability insurer or as a separate contract.
For building contractors this cover is often referred to as Design and Construct Professional Indemnity (D&C). In simple terms the policy will cover the contractor against claims of negligence or breach of duties arising from their design responsibilities.
Cover will typically include:
- Breach of professional duty
- Any negligent act, error or omission
- Employee Dishonesty
- Collateral Warranties
- Defence costs
- Costs & expenses incurred in order to mitigate a loss
A contractor may have either full or partial design responsibility in a contract, but as a minimum contractors are exposed to risks for any design alterations or tweaks during a project including the use of unsuitable materials.
HIRESHIELD INSURANCE SOLUTIONS
We are an established provider of insurance to the Plant Hire sector.
Our recommended Plant ‘All Risks’ Insurance policy has the option to include the Hireshield Subrogation waiver, which means that a plant hire firm can waive their usual rights of recourse against the hirer and instead have the plant covered by their own policy. Some plant firms will increase their hire charges in instances where subrogation rights are waived.
Additional insurances will almost certainly be required and may include;
- Annual Plant All Risks policy, including the Hireshield Subrogration waiver
- Property Damage and Business Interruption Insurance
- Public/Products Liability Insurance
- Employers Liability Insurance
- Good In Transit Insurance
- Management Liability Insurance including Employment Practice Liability
- Cyber & Crime Insurance
- Inspection policies, relating to statutory required inspection of plant
Our solutions are underwritten by a carefully selected panel of insurers, based on their financial strength, policy cover, and ability to provide a first-class service to clients.
To learn more about the products we can offer, visit our main construction page here.
Find out more
Tysers offers a range of covers for construction companies and contractors. Head to our main page to find out more, or speak to one of our specialist construction brokers:
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