In recent years, Indonesia’s heavy equipment industry has demonstrated impressive performance. Local heavy equipment production has increased sharply in line with the massive growth of infrastructure, mining, and plantation projects. Data from the Indonesian Heavy Equipment Association (Hinabi) shows that national heavy equipment production continues to increase year after year, and is projected to exceed 10,000 units per year in the near future.
However, behind this growth, a significant threat often goes unnoticed: heavy equipment damage claims. Damage occurring during transportation, field operations, and maintenance often results in significant losses. As a player in this sector, whether a heavy equipment owner, renter, or a member of the construction and mining industry, you need to understand how these risks can be minimized. Because even if production increases, without proper risk management, potential losses due to claims can erode profits.
Therefore, before risks come to hit your business, make sure your heavy equipment is optimally protected. Contact L&G Insurance Broker now on 08118507773 for free consultation before risk.
Increasing Local Competitiveness
Indonesia’s stable economic growth and the government’s push to accelerate infrastructure development have significantly increased demand for heavy equipment. In the past two years, local heavy equipment manufacturers such as United Tractors, Pindad, and Kobexindo have recorded an increase in orders from various sectors—particularly nickel mining and coal mining, as well as road and dam construction projects. The heavy equipment industry is no longer just a consumer market for imports, but has become a highly competitive local industrial force in ASEAN. With a market share reaching 40% in Southeast Asia, Indonesia has established itself as a strategic heavy equipment production base.
Risk of Rapidly Rotating Assets
However, this increase in production brings its own challenges—especially in terms of asset protection and risk mitigation. The higher the volume of heavy equipment in operation, the greater the potential for mechanical failure, operational accidents, and losses due to disasters or human error. Without proper protection, industry players can lose billions of rupiah from a single heavy equipment damage claim. This is where heavy equipment insurance plays a crucial role, balancing high productivity with the risks involved.
Why Are Damage Claims Still a Major Threat?
Main Factors Causing Claims
Although awareness of the importance of heavy equipment protection is growing, damage claims remain a serious problem in the field. Several key factors contribute to the persistent high number of heavy equipment damage claims:
- Operating in Extreme Terrain: Most heavy equipment operates in mining areas, plantations, and infrastructure projects under extreme environmental conditions. Soft soil, heavy rainfall, and unstable terrain often cause rapid wear and tear on heavy equipment.
- Lack of Scheduled Maintenance: Many heavy equipment units are used intensively without a regular maintenance schedule. As a result, critical components such as hydraulics, undercarriages, and electrical systems are susceptible to sudden failure.
- Operator Error (Human Error): Human error is the most common cause of heavy equipment damage claims. Inexperienced operators or those who fail to follow safety procedures can cause equipment to tip over, catch fire, or suffer structural damage.
- Transportation Risks (Marine Cargo): Damage often occurs even before heavy equipment is used. When heavy equipment is delivered from the manufacturer to the project site, the transportation process via ship, low bed truck, or barge can result in impacts, falls, or submersion in seawater.
Without proper heavy equipment insurance coverage, repair costs can become a significant burden for both rental companies and heavy equipment owners, ultimately hurting the entire local heavy equipment production chain and projects.
Case Studies and Main Risk Types
One real-life example occurred in 2024 in East Kalimantan. A contractor company lost a Rp 3.5 billion excavator after it rolled over at a mining site. The damage reached 70%, and repair costs exceeded Rp 1 billion. Fortunately, the company had used the services of a professional heavy equipment insurance broker, allowing the claim to be resolved quickly and significantly reducing losses. However, many businesses still lack adequate protection. As a result, the claims process is complicated by a lack of documentation, policies that don’t meet their needs, or insurance companies rejecting claims due to procedural errors. This is where the role of L&G Insurance Brokers becomes crucial, ensuring all coverage details and claim documentation comply with industry standards.
Types of Risks That Need to Be Covered
To keep your business running smoothly, it’s important to understand the risks that often lead to major heavy equipment damage claims:
- Machine and Mechanical Failure: Occurs due to material fatigue, overload, or lack of lubrication.
- Fire and Explosion: Caused by electrical short circuit or fuel leak in the project area.
- Operational Accidents: Such as heavy equipment overturning, hitting objects, or getting stuck in mud, which are the main causes of claims.
- Theft and Vandalism: Especially in open project sites with minimal supervision.
- Damage During Transportation: Risks covered by Marine Cargo Insurance.
The Vital Role of Insurance Brokers in the Claims and Protection Process
As an independent party on the client’s side, a heavy equipment insurance broker is tasked with ensuring that all your business risks are fully covered. This is what distinguishes a broker from a regular insurance agent.
Here are the main functions of an insurance broker that cannot be ignored:
- Holistic Risk Analysis: Identifying operational, transportation, and storage risks for heavy equipment. Brokers ensure your heavy equipment insurance policy has appropriate coverage for extreme field conditions.
- Choosing the Right Policy: Matching company needs with insurance products from various well-known insurance companies, including Heavy Equipment Insurance and its extensions.
- Total Claims Assistance: Brokers ensure that the heavy equipment damage claims process runs smoothly, quickly, and in accordance with applicable policies, reducing the contractor’s administrative burden.
- Preventive Consulting: Providing recommendations so that companies can reduce risks before major losses occur, for example operator safety standards or packaging procedures during transportation.
For example, L&G Insurance Broker has extensive experience handling various heavy equipment claims for construction, mining, and logistics companies in Indonesia.
Before risk arises, ensure you have a partner who thoroughly understands the heavy equipment industry. Contact L&G Insurance Broker now at 08118507773 for a free pre-risk consultation.
Financial Impact of Uncovered Claims
Threats of Downtime and Cash Flow
Many rental companies or heavy equipment owners only realize the importance of protection after experiencing significant losses. Even a minor accident can have a domino effect:
- Project delay and penalty.
- Repair costs soared, draining cash flow.
- The company’s reputation declined in the eyes of clients and investors.
- Potential loss of subsequent employment contracts.
In the heavy equipment industry, downtime is the biggest enemy. Every hour heavy equipment is down, potential revenue is lost. With the right insurance, the costs of damage, loss, and even loss of hire due to operational disruptions can be covered under a heavy equipment insurance policy.
Heavy Equipment Protection and Risk Management Strategy
To minimize potential claims and maintain business continuity, here are strategies recommended by insurance broker experts:
- Use Heavy Equipment Insurance with complete coverage including third party liability and loss of hire.
- Perform Routine Inspections and Maintenance: Record the results periodically to strengthen the evidence of insurance claims.
- Train Operators with International Safety Standards: Because human error is the cause of the most heavy equipment damage claims.
- Use GPS & Telemetry System: So that heavy equipment can be monitored in real-time to prevent theft or unauthorized use.
- Use an Experienced Insurance Broker: So that protection is not only limited to the policy, but also comprehensive risk management, such as that provided by L&G Insurance Broker.
Interestingly, recent trends indicate that collaboration between heavy equipment manufacturers, leasing companies, and insurance brokers is a mutually beneficial business strategy. Manufacturers focus on unit sales, leasing companies assist with financing, and insurance brokers cover the risks associated with ownership and use, creating a safer, more efficient, and more sustainable heavy equipment ecosystem that significantly supports local heavy equipment production in Indonesia.
Conclusion
The increase in local heavy equipment production is good news for the national economy, but also a crucial signal for industry players to strengthen their risk protection strategies. The threat of heavy equipment damage claims caused by extreme terrain, human error, or transportation risks can erode profits, delay projects, and even damage a business’s reputation. Proper heavy equipment insurance is an investment that ensures the operational sustainability of construction projects in Indonesia.
With over 30 years of experience managing heavy industry risks, L&G Insurance Broker is ready to be your trusted partner in ensuring heavy equipment remains safe, projects run smoothly, and claims are resolved quickly. This insurance broker helps contractors and heavy equipment owners obtain comprehensive heavy equipment insurance policies, including protection against transportation risks and third-party liability. L&G ensures your risk management complies with industry standards and regulations.
Don’t wait for risks to strike without warning, because every second heavy equipment stops means potential profits stop too. Protect your billions of rupiah worth of assets and secure your company’s cash flow.
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