Liga Asuransi – Dear readers, how are you? Again, we are going to discuss about heavy equipment insurance because lately there are so many questions asked by our clients regarding the issue of their insurance claims that are not met their satisfactory.
Indeed, the settlement of heavy equipment insurance claims is not that simple because the average claim value is quite high, or the term insurance is known as “high value and high frequency claim”.
As we have explained in the previous articles, because in Indonesia the risk of heavy equipment operation is high as a result there are not many insurance companies that have capacities to provide heavy equipment insurance products. Even though they are big insurance companies.
Therefore, only certain insurance companies can provide heavy equipment insurance, the total number is about 10 companies and only those that can understand about the actual risks of heavy equipment may only be about 5 companies. Not much choice.
Then how to get heavy equipment insurance if there are not many insurance companies options? The best way is to use the services of an insurance broker company that has experience in heavy equipment risks and has a strong network in the insurance industry. Insurance brokers have the freedom to choose the best insurance company for you.
To find out what heavy equipment insurance coverages are like and things that need to be understood, here we will be writing down some of the questions that are often asked by our clients around heavy equipment insurance.
- What does the “All Risks” insurance mean?
That’s right, heavy equipment insurance policies are also called Heavy Equipment “All Risks” insurance. That is, the insurance company will replace all accidents and losses that occur during the insurance period caused by events that come suddenly and unexpectedly (sudden and unforeseen).
So, if the damage is accidental and out of your control then most likely the accident is covered by the insurance company. For example, when heavy equipment is hit by a dump truck while it is in operation, then it is an accident that is covered by the insurance policy. Or when heavy equipment is working in the mine site and suddenly there is a landslide so that the unit is submerged and covered in soil, it is also covered by insurance.
- What is meant by insurance policy exemption?
Exceptions or in insurance policies also called “exclusions” are risks that are not covered, even if they occur suddenly. But these risks are generally also considered unnatural. For example, intentional damage, risk of war, risk due to nuclear reactions, and others. Such risks are not legally covered either.
Simply, all accidents and losses that occur suddenly and beyond your control, most probably they will be replaced by an insurance company. Easy, right?
- What is it meant by your own risk (deductible)?
Each insurance policy always has its own risk or deductible (except life insurance). The risk that is on your responsible. So, not all the risks are to be passed over to insurance companies, why is that so?
There are two main reasons why there is a risk of your own risks. First, because you will also bear the burden of every accident that occurs, then you will always be careful.
Second, the own risk itself is to reduce the cost of premiums. The greater the portion of risk that you bear, the insurance premiums will go down. The lower your own risk, the higher the premium. Which one do you choose?
- How to arrange heavy equipment insurance that financed by leasing?
Another more frequent questions are about relationship between the lessor and the lessee. Well, this is indeed a dilemma. As an owner and operator, you want to arrange insurance for the heavy equipment to get maximum coverage and by an insurance broker that you already know its reputation. Then with the competitive insurance premiums based on your experience.
When you use the services of a leasing company for financing of your heavy equipment, then the leasing company usually wants to arrange the insurance by itself. Claiming that the ownership of the unit is still in the name of the leasing company. They may be right, because at first the status of the lease then most of the ownership on behalf of the leasing company. However, gradually the portion of leasing will be reduced in accordance with the progress of your installments.
From the beginning of the negotiation with the leasing company, try to ask them to give you the opportunity to take care of the insurance on the machine. But mind that you need to include the name of the leasing company in the insurance policy then add a “leasing clause” so that the leasing company’s rights remain. Usually, in our experience the leasing companies will agree with that because it has happened quite often to many of our clients, as long as you have a good reason.
- Why should you to take care of the insurance?
First, because you are the one operating the equipment, you understand the risks you face. In the event of an accident, you immediately can process it with your insurance broker. You are calmer because you have prepared the best coverage as you wish.
In case of a claim, the settlement is more convenient because you are in direct contact with an insurance broker that you already know well, thus communication will run smoothly. Another case if the insurance policy is arranged by another party, you do not know them and you do not understand what the insurance policy coverage is like, maybe it will be a problem. What if the accident isn’t covered?
If you the one who take care of the insurance, you can negotiate to get the most competitive insurance premium rates. If it is not, then you just accept an insurance policy arranged by the leasing company, and what if the premium costs are much higher than the premium rate you usually pay!
And the most problem is in case if there is a claim, you will be in direct contact with the insurance that you yourself do not know, do not also understand the terms and conditions of the insurance policy. While the leasing party that arranges the insurance does not help you much. If the claim doesn’t go up to your expectations, like it or not you’re forced to accept it. No choice.
Once again If you can, from the beginning negotiate with the leasing company try to get approval that you are the one who will arrange the insurance. It’s for your convenience as well.
- Why should you use the services of an insurance broker?
The insurance broker is your consultant, they are on your side and are responsible for your insurance. Insurance brokers are not representatives of insurance companies.
Because the risk of heavy equipment insurance is high and the potential for claims is certainly also high. It is based on statistics from the insurance industry, that the Loss Ratio of heavy equipment insurance is about 60% to 70%. Considered as the highest loss ratio.
Managing the heavy equipment claims is not easy. It needs insurance knowledge, technical knowledge of heavy equipment and the ability to negotiate with loss adjusters and insurance parties. Well, all this needs to be handled by people who have insurance expertise and at the same time master in technical expertise of heavy equipment, that’s the job of an insurance broker.
Maybe you would say that you are comfortable in direct contact with the insurance company or with an insurance agent, is it still necessary to use the services of an insurance broker?
Hey, you need to know that the insurance agent is an “extension of the insurance company”. They represent the insurance company. They are under controlled by the companies they are in.
Maybe if the insurance claim that occurs is small and the amount can still be handled by the insurance company itself, then your claim will be smooth and payable.
But what if the claims that occur are large values or even total losses, will the process be as easy as a small claim? Hmm, not sure. As we all know that all companies will be very careful when it comes to large expenses. Including insurance claim!
This is why you need an insurance broker to help you to make your insurance claim is paid. Because you must be disappointed if the insurance claim is not paid!
- How long does it take for claim payment?
If the claim process is normal and smooth, then within a period of 3 to 6 months it can been paid off. The explanation is like this:
- In the event of an accident, immediately report it to your insurance broker.
- The broker immediately reviews your report, matches it with the Insurance policy and then immediately notifies the insurance.
- Usually, the insurance will immediately reconfirm that the claim report has been received within the same day. Otherwise, the insurance broker will “catch up” to get confirmation from the insurance.
- The insurance company will respond by asking for the required information including the claim form that needs to be completed.
- Once the information is complete the insurance company will inform whether the claim will be taken care of itself or will appoint the loss adjuster to process further.
- If the insurance company appoint a loss adjuster, then the appointed loss adjuster will contact the broker.
- If the loss adjuster has not contacted the broker, then the broker will take the initiative to contact the loss adjuster.
- On average after one week or in the second week there is already communication with the loss adjuster and set the next move.
- It is possible that the loss adjuster will conduct a survey to the site. The schedule depends on the loss adjuster. Usually within a week or 2 weeks after they are appointed.
- In the third week or the fourth week of loss adjuster conducts a survey to the location and will usually be accompanied by an insurance broker.
- After the survey, the loss adjuster will compile a loss adjustment report. It usually takes about 2 or up to 3 weeks. Depending on the volume of works and focus of the loss adjuster.
- In the second month usually an indication of the value of claims will come from the loss adjuster.
- In the middle of the second month, start to discuss about the value of claims submitted by the insured compared to loss adjuster’s adjustments
- It usually takes several meetings until a final claim amount is reached.
- At the end of the second month, an agreement was reached.
- 30 days after later payment received
But not all claim processes are like the above. The most frequent challenge is the collection of data required by loss adjusters.
If you take care of of the claim by yourself, maybe you are not familiar with the information needed for the claims process. But if you use the services of a broker, then an insurance broker will help you. This will save your time and speed up the claims process.
The claims process becomes longer if the insurance company is not responsive and has no experience in dealing with the risks of heavy equipment.
It is the broker’s job is to keep the claims process in accordance with the plan. Insurance brokers will actively ‘pursue’ loss adjusters and insurance companies to stay focused on settling claims.
One of the Indonesia’s national insurance brokers that have extensive experience in heavy equipment insurance is L&G Insurance Broker. They handle hundreds of companies and thousands of heavy equipment spread throughout Indonesia.
They have successfully settled hundreds of heavy equipment insurance claims ranging from small value to total loss including type giant equipment.
For all insurance needs you contact L&G Insurance Broker now!
Visit the website: http://lngrisk.co.id/
