A QUESTION OF INSURANCE

When we asked our participants about plant insurance we caused not a little uproar. There's a definite difference of opinion on this one. And it comes down just about 80/20 in favour of the contractor providing cover under his all-risks policy. When our sister magazine PMJ conducted a similar survey just a year ago then only 10% of contractors asked for the hirer to provide built-in cover.

But the 20% that insisted on the hirer providing the cover held that view very strongly. It's a problem which we've encountered before and it's growing as on-site theft becomes more prevalent. The fact is complicated further by some insurance companies telling hirers to smarten their security otherwise the premium is going to rocket. For some companies with a bad track record of theft claims, then it's going to be a refusal of cover.

Then there's the situation faced by those hirers which choose to self-insure. For some of the larger ones the limit for such schemes can be frighteningly high. How about individual kit to the value of œ50,000? That is serious money only to be embarked upon by the biggest of big companies.

Terry Kingcott is general manager of Agent Plant, part of Trafalgar House Group. He told CJ:'We've studied the problem and come down very firmly on the side of the customer providing the insurance. From questions we've asked of our insurers and our colleagues in the industry, it seems as if the accepted norm is for hirers which provide insurance to add just 8% to the hire rate. While that may be acceptable on a long-term hire - and I'm not sure on that one even - on a short-term hire it's absolutely out of the question.'

John Morgan is plant director of M & J Hire Centres. He's had more than 30 years' of experience in the plant hire industry. He spoke to us at some length. 'We've looked at the question of providing insurance for our plant and recharging the hirer. In fact, we've experimented with a scheme to do just that. But in the light of the enormous growth in plant theft from site - and our depots - we decided to stop it some while ago. As you can imagine our insurers weren't all that keen on the scheme either. It made them feel even more jittery about the low level of thought given to security on the average site. We also have had the added complication of moving our type of kit upmarket. A couple of years ago we had individual items, say dumpers, worth maybe œ10,000 when new. Now we have backhoe loaders at œ30,000-plus, telehandlers at similar or higher figures, and the average thief doesn't care what he steals. It's all grist to his mill.

'So the situation now is that we always insist that the hirer provides the insurance cover. If it's a hirer not well-known to us, then I'm afraid our people are instructed to ask for proof of the level of cover. That may seem a little extreme to those experienced from the good old freewheeling days, but it's been forced upon us by pressure from both the balance sheet and the insurance companies. We've been fitting various types of anti-theft device to most of our kit for some time now but the thieves seem to be always one jump ahead. And despite their best efforts, the police still can't seem to get to grips with the problem. Maybe it's something to do with the kit being perceived as non-glamorous.'

To get the customer's point of view we talked to Bernie Kelly, plant manager for McNicholas Construction. He told us: 'We have anything up to 1,800 - 2,000 pieces of kit on hire at any given time. They are scattered on sites all over the place. We do insist that our suppliers provide the insurance cover and we believe that the rates we pay reflect that fact. We also have a policy of preferred hirers and these are the kind of companies which provide security equipment with each item of kit. Our site agents are under strict instructions to bring back all kit to the security compound on site where possible. Failing that, then the drill is to chain plant to a secure object like a street lighting column. On our transport fleet we've got high security such as electronic immobilisers with alarms, airbrake locking devices and extra steering column locks. We also use tracking devices, but that doesn't actually stop theft, it just means recovery after theft should be quicker.'

We also talked to Ashtead md George Burnett. Normally a quiet non-outspoken, perhaps typical Scot, he was very forceful when questioned about providing insurance. 'Ashtead is absolutely diametrically opposed to this development. Most of the recorded theft of equipment takes place on site,' he said. 'If you tell the hirer ie a contractor that he needn't worry, you've covered the machine so far as insurance is concerned, then you might as well ask him to steal it, sell or otherwise get rid of it. There's little enough care given to hired-in kit anyway. Were this to become the norm, then there'd be absolutely none whatsoever. The crazy thing is, that we know that some plant hirers are actually using this as part of their marketing strategy. As far as we're concerned it's the thin end of the wedge. Soon it'll lead to the hirer paying the customer to be so kind as to please use his equipment! Absolutely no way!'

To get another view from a different kind of contractor, we went to East Anglia. Needham Market to be precise. Peter Clark is group md of Breheny Contractors. He's unusual in that he runs a huge fleet of plant for his own companies' needs. He told CJ: 'At any one time we have around a thousand items of plant in our fleet. But we still need to use hired-in plant to get over short-term scarcities. Say if we have two major sites starting up simultaneously. And, conversely, if we have a surplus which sometimes happens with the more specialised kit, then we'll hire it to companies which we have personal knowledge of. So I've got to see it from both points of view.

'I try to be fair minded about it. If we hire non-operated plant then I believe that we have a responsibility to both look after the kit and to either have it on our insurance or to expect to pay for it if it disappears whilst in our care. But I take a different view if we hire machines which include an operator. Then I see it as definitely the operator's responsibility to ensure that his machine is as safe as possible. Even if it is in our compound on our site, it's still his responsibility.

'After all, if it was stolen and his defence was simply, "Well it was in Breheny's compound and the compound was locked", I'm sure his employer wouldn't be very happy with that story. As a main contractor we cannot be responsible for every dozy operator who comes on our site. We're all facing huge hikes in insurance premiums and there's no doubt in my mind that a lot of this site theft is done from inside some companies. Thankfully it's not a major problem for us but it won't stop us being vigilant.'