Three Trends Fueling a Steady Increase in Specialty Machinery and Equipment Claims
If you’re responsible for protecting specialty equipment and machinery, you know it’s among the largest capital investments for a business. Whether in use on job sites or being stored, unexpected damages can be overwhelming and extremely costly. These claims require a rapid response and an experienced adjuster that understands the nuances of heavy machinery and equipment losses.
The heavy equipment used in construction and demolition projects are significant investments for owners and lessees of equipment. Recently, difficulty replacing damaged units, the cost
and availability of replacement parts, and an increase in equipment theft are driving a steady increase in claims according to Engle Martin’s Executive General Adjuster, Brian Stout.
1. Uptick in Repairing Equipment
“We are seeing an uptick of equipment owners opting to repair damaged equipment as opposed to replacing them,” explains Stout. Replacement parts can save customers time, money, and prolong the equipment’s longevity. “Now, more than ever, it has been quite difficult to find both new and used equipment. Based on the cost of new equipment, it is extremely cost prohibitive for a lot of customers as an option.”
The difficulties that we have seen with our customers trying to repair damaged equipment is associated with the turnaround time for a particular part which could take months on end to be delivered. Without that part, our customer, and their business, is unable to operate a unit that generates rental expense from $10,000 – $30,000 per month.”
The global pandemic coupled with shipping prices, labor issues, and increased pricing for materials has exacerbated the issue even after the world has started to normalize.
2. Increased Costs are Leading to Underinsured Equipment
The steady increase in replacement costs has created an entirely new set of issues for insureds and insurers. According to Stout, equipment owners or lessees are finding themselves underinsured due to the fluctuation in equipment costs. “For example, a client may have purchased a machine three years ago, but when compared to damaged equipment with the same unit today – it might be worth more now than when it was purchased three years ago.”
Stout continues, “traditionally, you may have felt safe insuring an $80,000 piece of equipment at $65,000, especially if there is the standard 80% coinsurance requirement. Today, in that scenario, it would be difficult to not only replace your equipment for the original purchase price of $80,000.00, but a major loss may result in not only being out of coinsurance compliance but being out thousands to replace your equipment due to appreciation. It’s important for owners and risk managers to understand the values of their equipment and verify that they are insured properly.”
3. Business is on the Line with Stolen Equipment
The dynamics of rising repair and replacement costs have become even more complex when the claim involves theft of equipment. With substantial monthly revenue impacted by the loss, businesses may fail if the claim cannot be resolved quickly. “Managing these claims as quickly as possible leads to a good resolution ensuring that the company is back to business as usual,” explains Stout. “If we can nail a claim within 30 ot 60 days on rented or stolen equipment, that’s a successful outcome!”
“My Focus as an adjuster is to be as accurate, timely, and operate each claim with the utmost of professionalism. At Engle Martin, those are just a few of our core guiding principles.”
Our Experts Make All the Difference
Engle Martin’s Specialty Marine & Transportation (SM&T) group are experts in the unique exposures related to inland marine and transportation claims. Our SM&T adjusters average 25 years’ experience in managing claims in this sector. SM&T provides coverage analysis, agreed appraisal, and confirmed valuation services with a focus on quality, prompt response, and attention to detail.