Playing it safe

Insurance is a critical part of our everyday lives. Why should heavy and moving equipment be any different?

Construction sites are 'high risk' environments. Working with heavy machinery can be dangerous and potentially life threatening if it is not used in the safest possible manner.

Safety measures have been put in place to prevent dangerous situations occurring, but accidents still happen. Companies must be insured for damage to machinery, loss of hours worked and injury to employees.

"It is clearly stated in the Ministerial Resolution 1987, as amended, that any vehicle is not to be driven unless it is insured at least against civil liability towards third parties.

"It is not compulsory to ensure the driver of a vehicle, but it is mandatory according to the regulation of the Ministry of Labour, in respect of certain jobs, to insure all the employees of the company against work risks including the drivers," says Firas Al Choufi, Senior Legal Consultant, Surridge and Beecheno Law firm.

There is more involved than just the price of the equipment. When it comes to deciding on insurance policy is appropriate, there are basics that need to be understood to determine what type of coverage is best for your company.
These include the type of policies that are available, valuation, deductibles and general liability.

Insurance is vital
Construction equipment is not standardised and insurance will vary greatly with each insurance carrier. Most property insurance can be extended to include owned, rented and leased equipment, along with rental replacement costs.

"There are two different forms of insurance coverage, one is for portable machinery and the second is for non-portable machinery".

Portable machinery, for example, is a crane. These would come under the machinery all risks, MAR, policy.
Non-portable would come under machine breakdown, this can also include small hand tools; it can vary. This includes loss, damage and faulty machines.

If any new machine is installed on a site or within an institution it cannot be covered under MAR policy, it will come under the machine break down policy," says Ali Hajjhasn, Underwriting Assistant, Engineering Department, Abu Dhabi National Insurance Company, Adnic.

Equipment can be registered with a detailed list of all machinery to be included on the policy or there can be a blanket policy. The blanket limit can be written on the total equipment covered, but not limited by what is registered.

The benefits of blanket coverage are that additions and deletions are not handled throughout the year. This eliminates the possibility of forgetting to add a new piece of equipment and cuts back on administration fees.

A responsible act
Every company has different ways of approaching which insurance packages will be purchased but one thing is clear: insurance is vital.

"Equipment and the operator must always be insured, some companies go for a full package, which includes the equipment, the operator, third party injury and accidents on site. Packages vary from one insurance company
to another.

"It all depends on what type of coverage the company is comfortable with; it all varies from one individual to another. Small companies may only get the minimum package, but I recommend that the full package be taken out.

"It is very expensive, but there are a lot of risks involved on a worksite. An accident may never happen or it may only happen once in a lifetime, but either way, it's worth having," says Fida Hussian, CEO of Infinity Aviation.

Insurance is the responsibility of the individual companies; equipment is not automatically covered if it is rented from a supplier.

Julian Ford, Business Development Director at Aggreko explains: "Insurance is the responsibility of the client, not ours as the supplier. We obviously have all the relevant insurance for us as a company, such as public liability and all the things needed to operate our business. Normally clients are used to dealing with that area.

"The Middle East is a safe place so insurance is mainly needed in case of damage more than anything else. The equipment is used in a controlled area on site so our clients know how the equipment should be handled."

Erring on the side of caution
Insurance is a vital part of running any business, not just a company within the construction sector. "It is very important to have insurance, whenever a potential risk could turn into fact.

"Whether it be loss or damage, if the act occurs then it is advisable to have full coverage or at least as much coverage as possible in order to compensate the loss and then return to work. Insurance has become a very important part of our everyday lives, it is something that we all now need to have," says Hajjhasn.