Any piece of working equipment can benefit from insurance – insurance provides a safety net in case of an unforeseen incident. However, cranes are not at all like other pieces of equipment. While there is always the potential for something to go wrong with any heavy equipment, cranes are unique in how many potentially dangerous situations they operate in and how many other pieces of equipment they interact with. For that reason, cranes require specialized insurance.
“Let’s say that a crane operator had a basic policy for said crane,” says Steve Leibel, group
managing partner for Leibel Insurance Group. “He was hired to lift some heavy equipment onto some trucks. Normally he does a great job, but today he’s got lots going on in his life – many distractions, and as a result, he didn’t properly fasten a piece of equipment before a lift and mid-lift the $120,000 Caterpillar piece of equipment fell and was wrecked to the point it would be a total loss.”
Under this scenario, traditional equipment insurance would likely protect the crane itself from damage, Leibel says. But what of damage to the item actually being lifted? Or damage to something else on the job site? Or loss of productivity from downtime related to an incident?
“Most people think that this is normally insured under their business liability policy, but it’s not the case,” Leibel says. “You can run into a situation where there is a substantial coverage gap, discovered after a claim has already occurred, which isn’t great for anyone.”
In such a case, there are many questions to be answered in determining an insurance claim. Did the load exceed the manufacturer’s recommended threshold? Was the equipment kept in a thorough state of repair? For that reason, it is important that a broker looking to insure a crane has experience dealing with these intricacies.
Knowing the nuances
“If you’re not in the business, then you don’t know the nuances of responsibility,” says Kevin J.
Cunningham, CEO of the construction division of Houston International Insurance Group. “That goes to the different provincial requirements of responsibility – who is directing the crane, how does the equipment rental agreement read, how does the general contractor’s subcontract agreements read? There are several variables involving responsibility in crane operations that, unless you’re in that business for a living, you tend to come on the losing side of lawsuits and outcomes because there’s so many nuances that drive responsibility. If you look at a high-rise job, you’re looking at concrete contractors, steel erection contractors, mechanical, etc. The crane is the workhorse and it works all the equipment and mechanics into that building process.”
Aside from the general issues of experience and knowledge of responsibility, there are also some very specific issues that require appropriate coverage. Mike Schott, commercial account executive with Dunbar Insurance Agency Ltd., says the critical element is offering coverages for crane-specific items which are excluded from traditional heavy equipment insurance.
“On a non-crane policy, overload is excluded,” says Schott. “In our crane program we’ve written it back in. If a crane guy goes to an insurance company that doesn’t have a crane program, these coverages are all excluded. Soft soil is an element that we have that’s excluded off most policies. Most crane operators are going to be working with soft soil. With a normal policy, if they pick something up on soft soil and it tips a million dollar crane, that’s excluded. On our policy, we’re paying for it. If you hit an overhead powerline on a normal policy, it’s excluded. We’ve written it back in on our program. You’re dealing with cranes with high booms and things like that, the odds of hitting that are going to be greater.”
Watch for hefty deductibles
Schott says Dunbar was one of the first dedicated crane insurance programs, designed
specifically for the industry. Most heavy equipment insurance on equipment valued over $500,000 (which most cranes are), has a deductible as high as 15 per cent. On a $1 million crane, that deductible is $150,000 — perhaps not a big problem for a company with a large fleet, but potentially devastating for smaller operations.
“We have low deductibles. Anything over $250,000 our deductible is $5,000 and anything under $250,000 our deductible is $2,500,” says Schott. “And then there’s the disappearing deductible: if your loss is ten times the deductible, you don’t pay the deductible. There’s tons of little perks and exclusions and things like that in our program.”
“We also match it up with transit coverage,” says Thea Nichols, senior commercial service broker for Dunbar. “If you have to go to the job site, on the boom truck or even on a trailer, you carry whatever it is you have to lift. If that’s worth a million and a half on the hook, you should also have matching coverage for transportation. We’ve learned over the years, from experience, that if there was a gap in coverage on any type of claim that was deniable, we put it back into the policy. There’s nothing left that really needs to be added.”
Leibel Insurance offer a comprehensive auditing system, which highlights coverage exposures with a diagnostic and consultative approach.
“Anyone with a crane gets regular visits to see if their risk has changed throughout the year,” Leibel says. “It’s hard to insure a risk properly that you haven’t personally seen. Also, the visits help us tell your story to our insurers so that everyone involved garners a clear understanding of what’s at stake.”
Be safe and avoid claims
Along with their insurance package offerings, HIIG have taken a proactive approach to reducing potential incidents on job sites that could incur claims. HIIG has formed a strategic partnership with the B.C. Association for Crane Safety, supporting its efforts to harmonize standards across all Canadian jurisdictions and providing risk education directly to operators.
“It’s challenging enough for a crane owner to administer and live by the regulations,” Cunningham says. “It’s a very mobile business, so to go from one province to another and have different responsibilities can throw the whole thing off. Our concern is it takes away from the ability to help the worker be trained in safety and risk management. It’s such a high hazard business that our organization believes that a risk-education platform is critical. If it can help save a life, that’s why we’re doing it.”
— Matt Jones