Heavy machinery insurance is a complicated business, operators don’t have the time to thoroughly read through a policy wording and nut out the optional covers available in the market. One of the most common issues with machinery claims is the difference between what the owner believes their machine is worth and what the insurance company ultimately determines as the market value in the event of a total loss.

Here’s the scenario,

Bob is the owner of Big Town Earthmoving and wants to insure his 2008 caterpillar excavator in very good condition for a sum insured of $100,000. Bob approaches Craig the insurance advisor, and they agree to arrange a covernote with Huge Insurance Company for comprehensive market value based cover.

Unfortunately, Bob’s machine is stolen a week later!

Bob contacts Huge Insurance Company and an expert machinery assessor is appointed.

The assessor makes relevant enquiries and acknowledges the claim is legitimate and recommends Huge Insurance Company payout Bob.

When the assessor is doing the report the assessor does market research and finds that Machinery Auction House sold a 2008 Caterpillar Excavator last month for $85,000 Ex GST.

Based on his research he recommends Huge Insurance Company settle Bob on a market value of $85,000 Ex GST.

Bob is furious that he is offered such a low settlement when he can’t replace the excavator for less than $100,000 Ex GST.

Bob spends the next 3 months arguing with the insurer for a higher settlement, and reluctantly accepts the $85,000 Ex GST.

MARKET VALUE PLUS is an optional extension under some insurance policies that provides a 15% gap cover between the nominated sum insured and the market value.

In other words it gives you 15% piece of mind should an assessor recommend a low value.

If Bob had taken market value plus cover he would have received a 15% higher settlement, less excess (The cover is capped at the sum insured, so the maximum you could recieve in a claim would be the $100k, less excess)

Often machinery operators will choose the cheapest policy that doesn’t include optional extensions such as market value plus.

Speak with an Insuregroup representative about market value plus cover today.

This is a very brief explanation and an opinion piece only, it does not represent the full terms and conditions of any policy available in the market.

Insuregroup: Experts in insurance