This 2016 in Argentina and bordering countries there was a rise in claims in mobile equipment covered by Technical Insurance policies for “contractor’s equipment”. It should be taken into account if the coverage includes total and partial damages or only the first.
Our office dealt with a large number of claims, of which several became total losses..
In general, in these claims there are several points to be deeply analysed:
a) Insurance sums against the reposition values of similar value equipment that match the value to be Insured.
b) History of the machine in regards to its documentation of ownership, although there are cases in which the regime is of leasing or “prenda”
c) Maintenance history sheets and histories.
d) The hypothesis of the cause of the loss. In this matter, it must be taken into consideration that a experimented expert must do this analysis. And with that information do the review of the insurance policy that covers the claims object of the study.
e) Analyse with the specialists businesses the costs and methodology of repair with its cots and analyse if the sinister can be qualified as partial or total.
This last point is crucial, given that you must know if the machine had defects of origin, such as design or fabrication.
f) In the case of total loss, calculate the residual value.
g) In the event of theft, confirm the sequence of the event, obtain data from the authorities and have the certainty if the event is theft, larceny, or employee infidelity with the purpose of analyzing the case against the conditions of the policy.
Based on our experiences the principal cause of these losses can be summarized in:
I) Theft
II) Fires caused by problems of use / bad maintenance or own faults.
III) Fires due to external causes. For example “the magnifying glass” effect, cigarette butts and even malicious acts in sectors adjacent to where the machines work.
IV) Human failures.
It should be made very clear the limitation of these Contractors Equipment policies in front of one of the Machinery Breakdown policies.
Finally, an adjustment criterion in total damages is the concept “real value of the equipment” which must be calculated knowing the details of the type of machine, age, maintenance, usage, and if there was any technologic obsolescence compared with the new models.