Contractors’ equipment (skid steers, backhoes, wheel loaders) are the most important pieces of equipment for contractors involved in the installation of septic systems. Is it simply calling up your broker and adding a piece of equipment to your schedule? Not necessarily, below I will highlight key endorsements that should be added to a contractor’s equipment floater to ensure that your equipment is covered at the time of a loss.

Ontario is a large province with different landscapes and terrain. Coverage for your equipment can be impacted if you do not have the correct coverage.

If I receive a call from a contractor telling me that he is going to be doing work on islands, the first question I will ask is how it is getting there. If they tell me that it is being barged, I will explain to the contractor that their policy has an exclusion that will not cover equipment while being transported over water. If the barge sinks, they would be out of pocket for the cost of removal and repair of the equipment. However, there is an endorsement that can be added to the policy. This is called the waterborne coverage endorsement. This can be added to the policy for an additional premium and will safeguard your equipment when being transported by water.

Do you work on ice or soft soil such as muskeg or swamp with your contractor’s equipment? If so, speak with your broker. The contractor’s equipment coverage has an exclusion for this exposure. If your equipment broke through ice and sank the policy will exclude this peril. However, similar to the scenario above you can purchase an endorsement that will allow you to buy back this coverage. Normally, the insurer will ask how often you are doing this, what type of terrain you are on and what measures do you take to make sure the ice or land are stable to handle the load of your equipment.

There are some other considerations to make with your contractor’s equipment schedule. The first is review the list of equipment each year. Keep in mind that once a piece of equipment is three years or older the insurer will give you actual cash value for the machine and not replacement cost. Your ten-year-old backhoe that you purchased for $150,000 may only have an actual cash value of $100,000. There is no point insuring a piece of equipment for $150,000 when you are only going to get $100,000. This will save you premium as well as the frustration of thinking your equipment is being undervalued by the insurer.

Renting equipment is a common practice in the industry. Rather than paying the rental company their expensive daily insurance rate you can insure rented contractors’ equipment on your own policy. This works out to a fraction of the cost of what you would pay the rental company. You will need to know what the most expensive piece of equipment you rent and put that limit on your policy.

A key endorsement that can be added to your policy is rental reimbursement coverage. This would provide you funds to rent a piece of equipment after your equipment has suffered a loss. Rather than paying the rental fee out of pocket the insurer would pay for the rental cost while your claim is being settled.

The next time you purchase a piece of equipment, rent equipment, travel over water or on ice you can refer to the points above and make sure that you are covered correctly. Speaking with your broker on an ongoing basis will help in covering off any gaps in your contractors equipment coverage.

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Written by:

Scott McMullen

Business Account Executive at Verge Insurance Group