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• The equipment has been appropriately
serviced and checked over – it is ready
for hire.
It is very important you understand what
your insurer will do in the event of a
claim.
Your Damage Waiver, if not appropriately
drafted, could render the Extended Dry
Hire benefit in your insurance policy
null and void. Meaning the insurer
could go ahead with a recovery against
your customer, even though that is not
the intent of the insurance policy. It is
advisable you discuss the terms and
conditions of the hire agreement with
your insurance broker or share a copy of
the hire agreement with your broker.
If you are a Member of the HRIA and are
a client of Arthur J Gallagher (formally
OAMPS Insurance Brokers), you have
purchased a Hire & Rental Mobile
Machinery Policy which automatically
entitles you to Extended Dry Hire cover.
Claim Example
Hire & Rental Inc supplied Construction
Company Inc a Front End Loader.
Construction Company Inc signed the
Hire Agreement that included a 5%
INDUSTRY in FOCUS
According to Jarrod, there are some
misconceptions within the hire industry
about the realities of damage waiver
insurance and what is actually covered
by the insurance.
“Within the hire industry, there is the
biggest misconception around damage
waiver policies: nine times out of 10,
damage waiver insurance policies
don’t cover theft or misuse or abuse of
equipment,” he said.
“Ask hire companies what happens if a
customer loses or damages equipment.
The customer assumes the hire company
is insured, not that they need the
insurance themselves.
“In the past months, we have had several
incidents where our equipment was
damaged or stolen. We had three thefts:
one was paid for; one was covered by
household contents insurance; one
wasn’t covered at all.
“We had three other equipment hires
come back with damage. Ultimately, I had
to pay for it.” Jarrod said.
“We wrote one piece of equipment
Most hire businesses will offer this
extended protection to their customers in
some shape or form.
Insurance policies can include clauses,
terms and conditions that support these
waivers and are commonly referred to as
‘Extended Dry Hire’.
So what is Extended Dry Hire?
When plant or equipment is lost or
damaged while on hire, the insurer would
traditionally look to recover from the
party who hired the equipment. Having
‘Extended Dry Hire’ in your insurance
policy means the hirer using your plant
or equipment (with your consent) is also
covered under the policy.
As with all insurance policies there are
conditions you need to be aware of. In
the case of the Arthur J Gallagher Hire
& Rental Mobile Machinery Policy, the
insurer expects:
• You have a formal, signed Hire
Agreement in place;
• The hirer has the right tickets to
use the equipment and the hire
business has provided appropriate
demonstration of how to use the
equipment correctly; and
You say Damage Waivers, insurers say
Extended Dry Hire...
By Joseph Siliga, National Product Development, Partnerships, Arthur J Gallagher
A Damage Waiver can give the customer comfort that if something happens to the item
they have hired, may it be due to their own fault or not, they won’t face a recovery
action from the hire business or the hire business' insurance company.
Damage Waiver fee and reference to the
proper use of the machine.
Hire & Rental Inc obtained a copy of the
operator's RIMPO321B ticket and both
parties went over the machine to discuss
the way it was to be used.
Construction Company Inc is a valued
customer of Hire & Rental Inc making up
approximately 20% of its annual turnover.
While the operator was using the
machine, it sustained significant damage
due to impact with another mobile
plant. The Insurer investigated the
circumstances and found the operator
was at fault, as he did not check his
mirrors while reversing and directly
impacted a stationary machinery unit.
Hire & Rental Inc, the insurer and the
Arthur J Gallagher Insurance Broker
discussed the next steps to resolve the
claim. Because Hire & Rental Inc and
Construction Company Inc complied
with the insurance policy conditions it
was agreed the Extended Dry Hire policy
benefit could be applied and there would
be no recovery action made against the
hirer.
Visit: www.ajg.com.au
off; but we had a negligent customer
who rolled an excavator and did $5000
worth of damage and had no insurance
coverage.
“Most hire companies have the ability
to choose not to subrogate customers
to protect their ongoing long term
relationships with customers.
“It appears some insurance companies
will only pay if you’re being negligent.
For example: if equipment is stolen from
inside a locked shed, some policies may
not cover that. What I’m saying is, we
Challenges of DamageWaiver insurance
The issue of damage waiver insurance has been presenting some interesting
challenges for Jarrod Kerr of Kerr’s Hire in Geelong Victoria in recent months.
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HIRE AND RENTAL NEWS • MAY 2016