Why Plant Hire Insurance Needs More Than Just a Motor Policy

In this engaging podcast, Tony from COVER Magazine interviews Fergus McNamara, Director of FDM Engineering Underwriters, to unpack the nuances of plant insurance in the construction industry.

The discussion sheds light on the critical differences between plant and motor vehicle insurance, with Fergus explaining how FDM’s plant policies are designed to cater to the unique risks of construction sites. FDM offers a wide-ranging and clear policy structure that includes options like new replacement value, market value, and agreed value, all while using a fixed depreciation system to ensure transparency and fairness for clients.

One of the standout features of FDM's policy is the reintroduction of absconding cover—a risk that’s increasingly affecting the industry, where plant hire companies face losses from machines being stolen under false pretexts. Fergus talks about the importance of this cover and the steps FDM has taken to safeguard both the insurer and the client.

The podcast also touches on the challenges of rising parts costs, which have seen a 30% increase annually, and the cyclical nature of the construction market. As demand for certain machinery fluctuates, brokers and insurers must stay informed to navigate these challenges. Fergus provides valuable insights into risk management, advising brokers on how to engage clients effectively and manage plant insurance policies with a clear understanding of coverage and exclusions.

If you’re looking to deepen your knowledge of plant insurance and learn more about the opportunities and risks in this space, this podcast is an essential listen.

Highlights

• Plant vs. Motor Vehicle Insurance: Plant insurance is significantly different from motor vehicle insurance, requiring specialized knowledge. FDM’s policy provides clear coverage with various options, such as new replacement value, market value, and agreed value.

• Depreciation System: FDM uses a fixed depreciation model for plant insurance, offering transparent calculations based on the machine's age and providing clarity for clients regarding their potential payout.

• Absconding and Theft: Absconding (theft under false pretenses) has become a major risk, with most plant theft happening when equipment is hired and then stolen. FDM offers cover for absconding, which many insurers no longer provide.

• Market Trends and Challenges: The plant hire market has seen fluctuations, with certain equipment like cranes and tippers being in high demand, while others like TLBs and excavators have been less active. Additionally, rising parts costs (around 30% annually) have been a significant challenge for insurers and plant hire companies.

• Brokers’ Role and Training: Brokers do not need to specialize in plant insurance to offer it effectively. FDM offers training to help brokers understand plant policies, including a quick reference guide and hands-on support for both experienced and new brokers.

• Future Outlook: Although the current construction market is quieter, FDM anticipates growth starting around 2026–2027, as infrastructure projects are expected to increase.