Insurance for Contractors Equipment
The so-called Inland Marine insurance market is the place to look for many coverages needed by contractors. From the insurance point of view, each contractors problem is considered separately. The type of operation, the nature of equipment, the area in which the contractor works, and other pertinent factors are all points considered by an Inland Marine underwriter in arriving at a final form and rate.
Obvious contractors equipment mechanical shovels, hoists, bulldozers, ditchers, and all other mobile equipment not designed for highway use is the primary subject of the Contractors Equipment Floater. Such protection is necessary because of the size of the investment in such equipment and of the multiplicity of perils to which the equipment is exposed.
Some companies will write the Contractors Equipment Floater Policy only on a named-perils basis, which ordinarily includes fire, collision, or overturning of a transporting conveyance, and sometimes theft of an entire piece of equipment. Other companies will write certain kinds of contractors equipment on the so-called allrisk basis. Certain perils, such as collision during use, are subject to a deductible fixed amount. The rate for this broader insurance generally is higher than that for the named perils form. In the all-risk form, the customary exclusions, such as wear and tear, the electrical exemption clause, strikes, riots, and other similar exclusions, are present. Because of increased exposure to nuclear hazards, all Inland Marine policies that insure against fire must carry a nuclear exclusion clause that provides that the company shall not be liable for loss by nuclear reaction or radiation or radioactive contamination, whether controlled or uncontrolled and whether such loss is direct or indirect, approximate or remote.
In addition to the equipment, there is a need to provide protection for the materials and supplies en route to or from the site. If these materials and supplies are transported at the risk of a contractor and are in the custody of a common carrier, a Transportation Floater should be obtained. If, on the other hand, these materials and supplies are moved on the contractors own trucks, a Motor Truck Cargo- Owners Form should be obtained. The premium for the transportation form is usually based on the value of shipments coming under the protection of the policy.
The coverage is usually on an all-risk basis. The Motor Truck Cargo-Owners Form is generally on a named-perils basis at a flat rate applied against the limit of liability required by the insureds needs.
Occasionally, a contractor may be responsible for machinery, tanks, and other property of that nature until such times as they are completely installed, tested, and accepted. Exposures of this kind are usually covered under an Installation Floater, which would provide insurance to the site as well.
The Installation Floater Form is generally on a named-perils basis, including perils of loading and unloading, at a rate for the exposure deemed adequate by the underwriter. Large contractors should have such insurance written on a monthly reporting form to reflect increasing values as installation progresses. Small contractors generally can provide for the coverage under a stated amount on an annual basis subject to coinsurance.
There is also a form of policy known as a Riggers Floater that is designed for contractors doing that type of work. This policy is usually a named-perils form at rates based on the nature of the rigging operation.
Neither the forms nor rates in any of these classes are standard among the companies writing them, although in general they are all similar.
Some contractors building bridges might be required to take a Bridge Builders Risk Form. This is an exception to most of the insurance provided to contractors, in that it is required to be rated in accordance with forms and rates filed in most of the states and administered by a licensed rating bureau.
