Liga Asuransi – Dear readers, how are you? This time we are going to discuss again about heavy equipment insurance. As we already know the demand for heavy equipment is currently quite high in Indonesia in line with the high demand for mining products, especially coal, nickel, and gold.
In addition, the demand for heavy equipment is also increasing in the construction sector, especially in the field of infrastructure and civil construction.
All of us understand that the risk of heavy equipment is high. There are high frequent accidents, and the damage value is also high. Therefore, all parties involved in the ownership of heavy equipment, want to ensure that the potential risks need to be handled properly.
One of the solutions is by insuring the equipment with maximum protection.
By considering the financial condition of the company, in general to get heavy equipment, usually owners will be using the services of leasing or multi finance companies. By taking leasing facilities, so that the company does not have to spend much money at an early stage.
Simply by issuing a down payment of 10% to 20%, the rest can be paid in installments for a certain period, usually for three years. The installment can also be obtained from the results of the use of this equipment.
Of course, this is very helpful because you do not have to spend funds fully in the beginning but financed by a leasing company.
As an insurance broker who has more than 30 years of experience in handling heavy equipment insurance this time, we want to share our views on Heavy Equipment Insurance, Between Lessee and Lessor
As we know that in financing transactions using leasing companies, there are two terms that need to be known, first lessor and second lessee.
A lessor is a party that provides financing or leasing companies, while a lessee is you or a company that needs financing.
To protect their interests, both sides want protection from heavy equipment. So that if there is an accident, they can get reimbursed from the insurance company.
For lessors, they want the assets must be protected by their insurance policies that they know so that in the event of an accident they get financial reimbursement for the damages that occurred.
For lessee or users, they also want heavy equipment to be covered by insurance so that in the event of an accident they get reimbursement for repair costs so they can continue the work and be able to pay installments to the lessor.
Because both parties want to insure, then how to arrange a heavy equipment insurance financed by the leasing company?
The solution is to issue an insurance policy on behalf of both parties or in insurance terms called Joint Insured. Usually, it will be written by mentioning the name of the leasing company, for example PT Leasing Heavy Equipment Perkasa QQ PT Mining Heavy Equipment Contractor. Sometimes also often use the word and / or as a substitute for the word QQ.
Legally and the practice of insurance by naming the names of interested parties is enough to show that each party is entitled to reimbursement in the event of a claim.
Who should take care of insurance, a Lessor, or a Lessee?
That’s often a dilemma. Usually, the leasing party has the initiative to insure the equipment.
Because the lessor is already insuring, the lessee does not have the opportunity to insure the equipment itself with their insurance company. Where they have had good experience so far, they have a “moral burden” also because there may have been frequent claims and paid by their partner’s insurance company.
What is unique about insurance transactions arranged by lessors, payment of premiums is by the lessee!
In addition, the lessee also does not have the opportunity to negotiate terms and conditions (insurance coverage) and as well as the selection of insurance companies used. The Lessee also had no chance to negotiate the cost of the insurance premiums. Usually, the cost of insurance premiums offered by leasing can be higher than if they take care of themselves.
In the event of a claim, the lessee will take care of the claims directly with the insurance company appointed by the lessor. This is more challenging. Because the two parties do not know each other so communication is not easy at first.
Then there are often problems. We know that the contents and extension of the insurance policy are not the same. If the insurance policy insurance is less extensive and many limitations that can cause the claims are not claimable, and if paid the value is not as expected.
In the event of a dispute, the lessee must fend for itself because the lessor can’t help much because they are more focused on the new transaction and its clients. The Lessee had to fend for itself against the insurance company.
Some leasing companies try to have their own insurance departments, but only certain companies that have it. The insurance handlers are usually people from within the leasing company who learn about insurance or who understand insurance. Of course, their understanding is not as wide as insurance people who have learned complete about insurance.
For insurance people (pure) usually they are not so interested in working as an insurance expert in a leasing company or bank though because of its limited scope of works, , no career and lack of rewards. They only deal with insurance issues with a small team.
Their job is to “keep premium costs as small as possible” then pursue the claim payment of “as big and as quick as possible”. If they can’t do those two things well, they can be considered not working optimally.
Whereas if they work in an insurance company, they will have a good career path, a more pleasant work atmosphere.
If the lessee protests to the lessor because his insurance claim is rejected or the amount is payable well below expectations, usually the lessor will pressure his partner’s insurance company with the threat of future cooperation that can be stopped, without understanding the real problem. Just for fear of losing business usually the insurance company will increase the amount r of claims for a business consideration.
Why should the Lessee who take care of insurance?
From the description above it shows that the arrangement of insurance by the lessor cannot fully provide maximum satisfaction. One of the reasons is because the lessor does not understand what the real risks are on the site.
If the lessee has already long enough experience in their business, then it can be ascertained that they already understand the risks they face so that they will also be able to take care of their insurance to provide the maximum protection.
Lessee can freely negotiate the contents of the policy (terms and conditions) as well as premium costs that are efficient in accordance with their budget with their insurance broker.
Lessee will use an insurance broker company that they already know well. Insurance brokers who have helped them a lot in the past so that the claims they submit will be paid in a satisfactory amount.
In the event of a claim, they can follow the claims procedure well. Communicate intensively with the insurance broker so that all documents, supporting information as well as damage details and cost estimates can be provided in a short time.
Therefore, to ensure that the insurance to be managed by the lessee, in the early stages of the negotiations, lessee should ask the lessor that they will take care of insurance on heavy equipment financed by the lessor.
By considering the above, most of the lessor can approve it on condition that the lessor’s name in the form of QQ and /or is added in the insurance policy. To assert the interests of the lessor, it is also necessary to add a clause “lessor’s clause” in the policy.
Thus, if there is a claim then the lessee will take care and be responsible and do not blame the lessee if the payment of the claim is not as expected.
How to handle the best heavy equipment insurance?
To get a good heavy equipment insurance coverage is not easy because not many insurance companies are willing to provide this type of insurance. The claim is a high as well as the potential for premium amount that are not too large due to the lack of heavy equipment population.
It is best to always use the services of an insurance brokerage company. An insurance broker is an insurance expert who is on your side. They design an insurance program that suits your business conditions. Negotiate to several insurance companies that have the capacity and could pay clients if they occur.
The insurance broker also acts as your insurance advocate. When there is a claim, insurance broker will be facing the insurance party and the loss adjuster appointed for the completion of the claim.
Insurance brokers as insurance experts understand the flow, procedures, contents of insurance guarantees so that there is a difference in assumptions and understanding with loss adjusters, insurance brokers can find the best solution that benefits all parties.
One of the insurance brokerage companies in Indonesia that has extensive experience in heavy equipment insurance is L&G Insurance Broker.
For all your insurance needs contact L&G right now!
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