Plant hire insurance for a hire business is a different exercise from insuring machines you run yourself. Your fleet spends its working life on other people’s sites, driven by other people’s operators, and the hire contract does as much work as the policy in deciding who pays when something goes wrong. The starting point is how you hire out. Our guide to dry hire insurance covers machines hired without an operator; this post looks at how a whole hire fleet is set up.
Dry Hire, Wet Hire or Both
Dry hire means the customer takes the machine and supplies the operator. Wet hire means you supply the operator with it. The exposure shifts in each case.
- Dry hire. Damage and loss while on hire usually fall on the hirer under the contract, so your own policy is protecting the asset and your ability to recover. Your liability exposure centres on the machine’s condition when it left the yard: faulty brakes, a worn sling, a missing guard.
- Wet hire. Your operator is working on someone else’s site, often taking directions from them. Damage the operator causes to property, underground services or people is primarily a liability question for you, and your public liability wording must describe operated hire.
Businesses that do both need both described. Our article on wet hire versus dry hire insurance goes through the differences in detail.
The Hire Contract Does the Heavy Lifting
When a machine comes back damaged, the first question is what the hire agreement says. A well-drafted agreement typically deals with:
- the hirer’s responsibility for loss and damage from delivery until return;
- whether the hirer must insure the machine, and whether you must be noted on their policy;
- any damage waiver you offer, what it costs and what it excludes;
- the hirer’s liability for hire charges while a damaged machine is repaired;
- permitted use, permitted sites and who may operate the machine;
- return condition, inspection and how disputes are handled.
An agreement only protects you if it is signed before the machine leaves, by someone with authority, and if your terms are actually part of the contract. Unsigned dockets, and terms printed on the back of an invoice sent after the hire, are weak ground.
Damage Waivers Are Not Insurance
A damage waiver is your contractual promise to limit what you recover from the hirer for damage, in exchange for a fee. It is not an insurance policy for the hirer. If you offer waivers, check that your own policy responds to the damage you have agreed not to recover, and tell your broker exactly how the waiver is worded. A waiver can affect your insurer’s right to recover from the hirer, and some policies need to be told about it in advance. Our dry hire insurance page explains how hirer responsibility and waivers interact.
Theft by the Hirer: Conversion
Some of the hardest losses in hire are machines that never come back. A hirer using false identification or someone else’s card takes a machine and disappears with it. Legally this is often conversion or theft by deception rather than a break-in, and policies can treat it very differently from a machine stolen off site overnight.
Check whether your policy:
- includes, limits or excludes loss by conversion, fraud or deception;
- applies a separate excess or sublimit to it;
- imposes conditions, such as identity checks, a verified address or a deposit.
Controls that help: sighting a physical licence, confirming the delivery site before dispatch, deposits on a card in the hirer’s own name, GPS tracking with geofence alerts, and immobilisers on high-value units. Write the controls down, because a policy condition you cannot prove you met is little better than one you did not meet.
Recovering Damage From Hirers
When a hirer damages a machine, you can pursue them directly, or claim under your own policy and let the insurer recover. Claiming under your policy can be faster and moves the cost of chasing the hirer to the insurer, but it goes on your claims history and the excess applies. Recovering directly keeps small damage off your record but takes your time.
Whichever route you take, the evidence is the same: condition reports and photographs at dispatch and return, hour meter readings, the signed agreement, and the hirer’s own certificate of currency if they were required to insure.
Hire Income While a Machine Is Off Fleet
A damaged machine stops earning. The physical damage cover pays to repair or replace it, but not for the weeks of lost hire. That loss is insured separately, as hire income or loss of rental cover, which typically pays for a set period after an insured event. Check the waiting period, the indemnity period, and whether it responds only to damage while on hire or also to damage in your yard.
Where parts come from overseas, repairs can take far longer than expected. Size the indemnity period against real lead times, not optimistic ones.
Transport to and From Site
Machines are often damaged in loading and transit rather than at work. If you deliver on your own floats or trailers, check that the plant policy extends to transit and to loading and unloading, and that the vehicle policy deals with the float itself. If a third-party carrier delivers for you, their terms of carriage will usually limit their liability, and your own cover needs to fill the gap.
Structuring Plant Hire Insurance for the Fleet
- Keep one asset register with serial numbers, attachments and current replacement values, and reconcile it with the insurance schedule every time you add or sell a machine.
- Decide on agreed or market value machine by machine. Our guide to market value and agreed value explains the trade-off.
- Match public liability to the hire you actually do, including operated hire.
- Decide how small plant such as compactors, saws and light towers is insured, since itemising every unit is impractical. Blanket cover with an item limit may suit.
- Choose excesses that reflect how you handle small damage: absorbed and recharged to the hirer, or claimed.
For businesses that combine hire with their own contracting, see our article on insuring a mixed equipment fleet. For a machine type that sits at the centre of the hire market, our post on mini excavator insurance covers the specific hire-out risks.
Common Questions
Should I require hirers to insure the machine?
Hire businesses commonly ask longer-term hirers for a certificate of currency showing hired-in plant cover, with the hire company noted. It gives you a second route to recovery, but it does not replace your own cover.
Will my policy respond if a hirer’s operator damages the machine through misuse?
It may, depending on the wording and any conditions about permitted use. Recovery from the hirer then becomes a question for the insurer and your contract.
Can I claim for hire charges a customer refuses to pay?
Unpaid hire is a debt, not an insured loss. Hire income cover typically responds only where an insured event has taken the machine out of service.
Talk It Through
Request a quote or call 1300 983 940 and we will review your hire agreement and fleet schedule together, so the contract and the policy point the same way.
General advice only. This article does not take your objectives, financial situation or needs into account. Consider the relevant PDS and Target Market Determination before deciding on a policy.