Hire and Rental News - February 2018

ver bought the cheapest insurance available for your business thinking: ‘It’s OK, it’ll never happen to me?’ If so, you wouldn’t be alone. But you could be making a big mistake because major insurance claim events hit hire and rental businesses all the time and the clean-up costs can be enormous. Since 2010, we’ve seen more than 100 claims per year made by hire business owners. That’s two per week on average. These claims represent nearly $7 million dollars’ worth of insured losses. The largest single claim paid out in that time was in excess of $360,000, which was a property claim for storm damage in QLD. Gallagher’s figures show between 2010–2017, almost 50% of all hire business claims in Australia relate to plant and machinery. A further 37% relate to property, with the remaining 14% being liability claims. Historically, the biggest risks are Breaking down the insurance risks Research conducted into hire and rental industry claims over a seven-year period by hire industry insurance broker Gallagher’s QLD representative Rick Hyde (also a member of the HRIA QLD Committee) paints a clear message: don’t underestimate your level of risk. Here Rick discusses the risks faced by the industry – and what business owners need to consider to protect their livelihoods. machinery loss or damage, followed by damage to property owned by your business. After that come liability claims, which largely involve personal injury or damage caused to third party property. However, when it comes to average claims costs the list is inverted. Although liability claims are far less frequent than machinery damage, over the past two years the average claims cost is 12 times higher at around $36,000 per claim. Property claims costs are also high. In the last two years alone the average property claim has reached nearly $30,000. A number of big claims caused by major storms over the past 24 months have contributed to that. The breakdown of the type of claims made by hire businesses is shown in the diagrams, and outlines the biggest risks faced by the industry. The key take out from these claims stats is hire businesses need to take risk management seriously, and they need to make sure they have an insurance program that adequately protects them for the risks they face. Most business owners, in any industry or profession, don’t truly understand risk or insurance. They often look to cut outgoings by choosing cheaper insurance. But when claims costs run into the tens of thousands of dollars, saving a few hundred dollars on premiums isn’t going to feel like a good deal if you find you’re not properly covered and you don’t get the payout you thought you would. Seeking expert advice on insurance should be a priority for all hire businesses. This will help ensure you have the right type of insurance for your business’s unique risks, as well as the right level of cover. This helps businesses avoid being underinsured, which can cause significant financial loss to the business in the event of a claim. I recommend being educated on your risks to make an informed decision on insurance purchases. Take storm- Hire business claims statistics (*Figures from October 2015 – October 2017) 49.6% – Plant & Machinery 36.7% – Property 13.7% – Liability Total hire business claims (2010-2017) 59.5% – Impact/Accidental Damage 33.5% – Theft/Burglary/Malicious Damage 4.5% – Fire 2.5% – Storm Average claims cost = $3780 Plant & Machinery claims breakdown* INDUSTRY in FOCUS 22 HIRE AND RENTAL NEWS • FEBRUARY 2018 E