Equipment values are rapidly changing
Every construction business faces the risk of having their equipment damaged or destroyed. That’s why contractor’s equipment coverage is key component of every contractor’s business insurance program. It’s a common coverage, but in today’s dynamic environment, the value of construction equipment is rapidly changing. This means your client’s equipment has a higher risk of being undervalued if it has not been recently assessed.
Equipment valuation by the numbers
10.1%
increase in producer price index (PPI) for construction machinery and equipment in 2021, compared to a 1.1% jump in 2020
17%
increase in Caterpillar revenue in 2022, compared to the previous year
95%
of equipment manufacturers experiencing supply chain issues
Digging in to equipment valuation
's Jason Muise, Chief Underwriting Officer, Marine and Amy Panagiotou, Assistant Vice President, Marine, discuss why now is the time to ensure contractors have an updated equipment valuation assessment and how that helps your clients avoid out of pocket expenses in the case of a covered claim.
Four factors impacting valuation
- Critical labor shortages
- Many experienced machinery handlers are approaching retirement, and contractors are having difficulty replacing them with handlers of similar expertise. This means inexperienced staff could be operating expensive machinery, resulting in a higher probability of damage or total loss. When machinery does need to be repaired, mechanics for specialized equipment are in shorter supply resulting in longer lag times and higher costs to repair equipment.
- Supply chain issues
- Supply chain interruption, including microchip shortages and shipping delays, has led to low inventory of available machinery, equipment and parts. Geopoliticial conflicts and lingering COVID-19 effects are resulting in lower supply and higher prices.
- Rise in new construction
- Contractors are facing unprecedented backlogs of construction projects, and are looking to purchase equipment to complete the work. With the scarcity of new equipment in the market, contractors turn to the used and rental machines market. However many rental companies are holding onto their machinery longer as they have no new equipment with which they can replace aging equipment.
- Continued increase in inflation
- The price of steel and other materials that are crucial to the manufacturing of intensive heavy equipment is on the rise. No matter the size, all parts of equipment are surging in cost, including electrical components, filters, undercarriages, rubber tracks and emission related parts.
Help keep your customers protected
It is important to regularly work with your customers to ensure their limits on their equipment schedule reflects today’s market. Each new policy period is a good cadence.
Equipment valuation factors
To determine a piece of equipment’s current market value, the following elements should be taken into account:
Hours of use
Wear and tear
Modifications
Conditions
Valuation tools and resources
These resources can help your customers better understand the current value of makes and models similar to their equipment to establish a baseline value:
Equipment sales websites
(machinerytrader.com)
Online auction houses
(ironplanet.com)
Local auction houses
Local equipment dealers
Protecting contractors' property from theft
Ensuring your client’s valuation is up to date for today’s market isn’t the only way that you can help them protect their investments. With the shortage of equipment in the marketplace, ensuring that they are properly protecting their equipment is paramount. These proactive steps can help deter thieves and enable your clients to more easily locate their equipment in the event of a theft.
Secure jobsites
- Mark all tools and equipment in a conspicuous, distinctive manner to allow for easy identification.
- Immobilize equipment by disabling it or using anti-theft/anti-vandalism devices.
- Provide limited access to the site at all times, preferably with lockable gates.
Prevent theft
- Consider re-keying the equipment to a unique key for your company.
- Use an interlocking parking pattern to secure equipment.
- Install a hidden fuel shut off valve.
Track stolen equipment
Our asset tracking program, available to our Hanover policyholders for a discount, helps locate heavy equipment with state-of-the-art tracking technology, so you can be sure these costly tools are in the right place at the right time.
Contractor's equipment resources
Insurance to value
This infographic shows the impact of inflation on insuring property.
Resources for your agency
Explore our contractor's equipment offering
Quote, bind and issue online
TAP Sales allows you to issue contractor's equipment policies quickly and easily.
Resources for your customers
Auto telematics for fleet management
Construction site security tips
Equipment theft prevention tips
Additional resources to compare current values
Explore our contractor's equipment offering
Sources:
Equipment values are rapidly changing
Every construction business faces the risk of having their equipment damaged or destroyed. That’s why contractor’s equipment coverage is key component of every contractor’s business insurance program. It’s a common coverage, but in today’s dynamic environment, the value of construction equipment is rapidly changing. This means your client’s equipment has a higher risk of being undervalued if it has not been recently assessed.
Equipment valuation by the numbers
10.1%
increase in producer price index (PPI) for construction machinery and equipment in 2021, compared to a 1.1% jump in 2020
17%
increase in Caterpillar revenue in 2022, compared to the previous year
95%
of equipment manufacturers experiencing supply chain issues
Digging in to equipment valuation
's Jason Muise, Chief Underwriting Officer, Marine and Amy Panagiotou, Assistant Vice President, Marine, discuss why now is the time to ensure contractors have an updated equipment valuation assessment and how that helps your clients avoid out of pocket expenses in the case of a covered claim.
Four factors impacting valuation
- Critical labor shortages
- Many experienced machinery handlers are approaching retirement, and contractors are having difficulty replacing them with handlers of similar expertise. This means inexperienced staff could be operating expensive machinery, resulting in a higher probability of damage or total loss. When machinery does need to be repaired, mechanics for specialized equipment are in shorter supply resulting in longer lag times and higher costs to repair equipment.
- Supply chain issues
- Supply chain interruption, including microchip shortages and shipping delays, has led to low inventory of available machinery, equipment and parts. Geopoliticial conflicts and lingering COVID-19 effects are resulting in lower supply and higher prices.
- Rise in new construction
- Contractors are facing unprecedented backlogs of construction projects, and are looking to purchase equipment to complete the work. With the scarcity of new equipment in the market, contractors turn to the used and rental machines market. However many rental companies are holding onto their machinery longer as they have no new equipment with which they can replace aging equipment.
- Continued increase in inflation
- The price of steel and other materials that are crucial to the manufacturing of intensive heavy equipment is on the rise. No matter the size, all parts of equipment are surging in cost, including electrical components, filters, undercarriages, rubber tracks and emission related parts.
Help keep your customers protected
It is important to regularly work with your customers to ensure their limits on their equipment schedule reflects today’s market. Each new policy period is a good cadence.
Equipment valuation factors
To determine a piece of equipment’s current market value, the following elements should be taken into account:
Hours of use
Wear and tear
Modifications
Conditions
Valuation tools and resources
These resources can help your customers better understand the current value of makes and models similar to their equipment to establish a baseline value:
Equipment sales websites
(machinerytrader.com)
Online auction houses
(ironplanet.com)
Local auction houses
Local equipment dealers
Protecting contractors' property from theft
Ensuring your client’s valuation is up to date for today’s market isn’t the only way that you can help them protect their investments. With the shortage of equipment in the marketplace, ensuring that they are properly protecting their equipment is paramount. These proactive steps can help deter thieves and enable your clients to more easily locate their equipment in the event of a theft.
Secure jobsites
- Mark all tools and equipment in a conspicuous, distinctive manner to allow for easy identification.
- Immobilize equipment by disabling it or using anti-theft/anti-vandalism devices.
- Provide limited access to the site at all times, preferably with lockable gates.
Prevent theft
- Consider re-keying the equipment to a unique key for your company.
- Use an interlocking parking pattern to secure equipment.
- Install a hidden fuel shut off valve.
Track stolen equipment
Our asset tracking program, available to our Hanover policyholders for a discount, helps locate heavy equipment with state-of-the-art tracking technology, so you can be sure these costly tools are in the right place at the right time.
Contractor's equipment resources
Insurance to value
This infographic shows the impact of inflation on insuring property.
Resources for your agency
Explore our contractor's equipment offering
Quote, bind and issue online
TAP Sales allows you to issue contractor's equipment policies quickly and easily.
Resources for your customers
Auto telematics for fleet management
Construction site security tips
Equipment theft prevention tips
Additional resources to compare current values
Explore our contractor's equipment offering
Sources: