The devil's in the details when it comes to contractors' equipment insurance

The area 'lends itself to specialization' — and for good reason, said Victor Insurance’s Jeff Benson

The devil's in the details when it comes to contractors' equipment insurance

Construction & Engineering

By Mallory Hendry

This article was produced in partnership with Victor Insurance Managers LLC.

It’s long been said that the devil is in the details, and for a niche area like contractors’ equipment insurance, that old adage definitely holds true.

“It’s an often misunderstood line of business,” said Jeff Benson, contractors’ equipment program manager at Victor Insurance Managers LLC. “It lends itself to specialization. There’s a lot of misclassified risks out there — I’ve seen schedules for millions of dollars of equipment that may not be covered properly based on the way it is classified.”

That’s where deep-rooted expertise comes into play. This is a very old line of business, Benson said, adding he “feels like I’ve been underwriting it just as long,” and the Victor team is tenured as well.

“We have developed a program specifically designed for contractors’ equipment insurance,” Benson explained. “Our coverage forms are tailored to address the unique exposures in this line of business. Our underwriting staff has years of experience, and our online portal, V2, provides a seamless experience for submitting, binding, issuing, and maintaining policies.”

Back to basics: What is contractors’ equipment?

Contractors’ equipment is the largest single line of inland marine business in the US and is defined as the insuring of mobile machinery such as bulldozers, cranes, excavators, and front-end loaders, as well as lighter equipment such as forklifts. There are some caveats, such as the equipment can’t be licensed for road use nor can it be waterborne. The primary purchasers of this coverage are contractors — the street and bridge contractors, electricians, plumbers, and painters, to name a few — followed by warehousing operations, schools, and municipalities.

Contractors’ equipment insurance is important not only because it satisfies contractual requirements, when applicable, but also because it covers what’s critical to a business’s ongoing operations. It essentially protects livelihoods: for example, if something happens to a swimming pool contractor’s backhoe, they can’t just go out with a shovel and dig the hole, Benson noted. Victor has the expertise to tailor coverage that truly suits the insured’s needs and keeps projects running smoothly.

Rooted in the day-to-day, with coverage to match

Asking the right questions is crucial and the team at Victor, who write these policies all day, every day - know what issues need to be addressed. Is the equipment purchased, rented, leased? Does the insured ever borrow a piece of equipment, or lend theirs out? Transportation of equipment can be a tricky area: if the insured is hauling equipment on the back of a trailer to the next job site, is it covered? That depends on the form language as some carriers exclude transit, while others may have small sublimits.

While larger carriers may include writing all lines of business for subcontractors including contractors’ equipment as an endorsement, Benson warned that “agents should be aware it’s not a specialized form so there might be some gaps in coverage: just because it’s included doesn’t mean it’s covered properly, or adequately.”

“Agents and insureds need to understand their exposures to ensure the right line of business are in place, and that all exposures are covered, whether by a contractors’ equipment, auto, or property policy,” he said.

As specialists in contractors’ equipment, Victor uses the best-in-class AAIS form. Its scheduled equipment form includes a coverage extension for debris removal and automatically includes the following supplement coverages – employee tools, equipment leased or rented from others, newly purchased property, pollution cleanup and removal, rental reimbursement, and spare parts and fuel.

Victor might not be the only provider in the marketplace to have access to these form options, but it has the expertise to offer a tailored policy to cover the unique exposures of an individual insured Just because an insurer has access to coverage doesn’t mean it’s been applied correctly — a tool is only as good as the person who wields it — and put simply, Victor is “rooted in the day-to-day of what these contractors and entities are doing.”

Trends in the space

As specialists in the space, Victor keeps up with developments. Benson is seeing notable market advancement in loss control, for example, which has helped improve industry experience. 

“Contractors literally have millions of dollars of equipment sitting out in the open, and that’s one of the unique exposures,” Benson said. “It’s always a good idea to take a bit of time to protect that equipment.”

Loss control methods being employed with greater frequency include GPS tracking, improved fire suppression measures, and increased security, such as utilization of lights, cameras, and security guards. And with the contractors’ equipment insurance line of business directly related to the total value of all insured equipment, there are billions of dollars of business out there strongly suggesting this space has very positive projections.

“Inland marine insurance, specifically contractors’ equipment insurance, is directly correlated to the overall construction industry,” Benson stated. “As construction projects increase, be it residential, commercial or infrastructure, so does the demand for contractors’ equipment, leading to a greater need for coverage and capacity. We are witnessing this trend in our business and expect it to continue in the future.”

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