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Protect your equipment, avoid costly claims

John Wallen is vice president and Wisconsin construction practice leader for the global insurance brokerage Hub International.

It’s a classic story involving the theft of construction equipment: A number of years ago, a rented skid-steer loader was stolen from a construction site. The theft took just ten minutes, as recorded by security cameras, but included the universal key that could lead to other thefts on the Waukesha site.

A year later, the city of Baraboo announced a series of construction plans that led to a rash of equipment thefts. Suddenly, the town was the site of 30 equipment thefts, making it the city with the highest theft to population rate in the country.

Equipment theft is a real problem across the U.S., with 600 to 1,200 cases annually. The worst part is that the issue is bigger than just replacing the stolen piece of equipment. When equipment goes missing, contractors wind up paying in other ways too, in project delays, lost or wasted man-hours and increased expenditures, such as rental equipment costs and higher insurance premiums. In fact, the National Insurance Crime Bureau estimates that construction theft costs an average of $400 million every year, including both direct and indirect costs.

Five steps to secure your job site

Individual contractors may feel powerless. After all, if that Waukesha skid-steer loader was stolen from a site with security cameras, what could anyone possibly do to mitigate the risk any further? Yet taking preventative security measures does have a real impact. Here are five protocols that can make a difference.

  •  Label everything – and keep records. Nearly 1500 skid steers were stolen in 2015. If yours is one of them, you won’t be able to identify it and facilitate recovery unless you have labeled it. In fact, it’s a good idea to mark all your equipment – including any attachments – with the company name. Use welding or etching tools to ensure the name can’t be easily removed. You may want to consider microdot technology, a method of labeling that involves etching a series of tiny invisible dots onto a piece of equipment that show up under special lighting or magnification. Also important is maintaining an inventory of all equipment on the site and where it’s located. This helps you identify missing equipment as quickly as possible.
  • Strengthen security with multiple defenses. Criminals aren’t looking for a challenge; they’re looking for a quick win. With multiple layers of security, the average criminal will look elsewhere. Start with a locked building envelope, locked doors, and climb-resistant fencing – which might just be a simple chain-link fence covered with sheets of plywood. Hang warning signs advertising 24-hour video surveillance or reminding passers-by of the penalties for trespassing. Aim for leaving as few access points as possible and monitor them carefully with technology or even 24/7 guards. Arrange for adequate lighting and consider motion detection monitors and alarms.
  • Take advantage of technology. Big job sites with a large number of tools and equipment should strongly consider Internet of Things (IoT) solutions. Although expensive, they combine lighting, monitors and alarms to protect equipment in real time. In addition, these sensors can also help identify other risks, such as fire and flooding. Just a few strategically placed sensors can have a huge impact on a site. GPS trackers aren’t just for vehicles anymore. In many cases, a small, hidden tracker can expose the storage location for many pieces of valuable equipment. Today, GPS trackers can be smaller than a cell phone, and it’s common to install them on items like generators, welders and trailers. Make sure the tracker is installed in a place where it isn’t obvious and won’t be immediately disabled in case of a theft. Don’t forget about motion sensing cameras, which range from comprehensive high-tech systems to an inexpensive arrangement with a flexible power solution. These cameras can be hardwired or solar powered and can rely on a cell phone signal or wi-fi. When they sense motion, an automated message is sent to a cell phone in real time. Some vendors even offer 24/7 monitoring.
  • Identify the risks. Give some extra attention to what’s most at risk, including portable and drivable equipment. These are the most commonly stolen pieces. Put smaller equipment inside the locked building, if possible. Anything that can be attached to a vehicle and driven off should be hidden to make it less visible. Use hydraulic locks and hidden disconnects to protect those items from theft as well.
  • Hide it away. Securing adequate storage can be helpful, provided you can lock the pieces down and secure them properly. What’s more, a little common sense can be helpful as well: Require employees to return keys and smaller, portable equipment to an appropriate, safe location, rather than allowing them to store everything on site for convenience. It’s also a good idea to avoid a “universal” key, which can leave the whole site at risk in case of a theft.

Secure adequate coverage to protect your business

Even if you have done everything you can, you may still lose equipment to theft. The trick is secure appropriate coverage in order to avoid costly, claim-related issues and work interruptions. Unfortunately, few contractors have appropriate insurance to protect their full interest. For example, most construction businesses don’t have enough coverage to replace their equipment, either because the cost of new equipment exceeds the coverage or because ancillary equipment isn’t excluded from the policy. Even if they do have sufficient coverage, they may not have a rental reimbursement or a loss of use coverage to mitigate the job delays that come from missing equipment. There are a number of additional coverage considerations or potential gaps to consider, depending on your business.

The best course of action is to consult your broker.

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