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Typically done, while the construction industry shuts down over the end of year holidays, civil contractors have their survey equipment recalibrated and repaired in preparation for the new year. Unfortunately, on Christmas day 2022, a Melbourne-based survey solution company encountered a wide-spread fire triggered by an electrical fault, causing total loss to all assets.

The incident had significant impact on various contractors, including those involved in civil, building, mining, quarrying, landfill, dredging, and renewable projects. Consequently, there was a surge in demand for surveying equipment, leading to limited stock availability at the beginning of the year.

In this article, we aim to provide you with essential information about what you should be aware of when entrusting your goods to a service provider and what coverage is actually provided.

Who is responsible for my goods when with a service provider?

When you have service providers doing work for you, terms and conditions should be attached to the contract, clearly stipulating who would be responsible for your goods should anything happen.

It’s imperative for our clients not to assume that the service provider is 100% liable for any damage or loss to their goods while in their care.

The responsibility ultimately depends on the situation, for example, in the case of the surveying equipment company:

  • If the organisation was conducting maintenance on the equipment and it was damaged during the process, a claim could be considered via their own public liability insurance within the section Care Custody & Control.
  • An electrician could also be found responsible if it’s determined that they failed to perform electrical upgrades and maintenance correctly, which could have triggered the electrical fire and again damaging third party property.

These are a few examples insurers would need to investigate in determining the negligent third party.

I didn’t read the terms and conditions properly. Are my goods covered through the surveying company’s property insurance? What about my own insurance policy?

It’s important to note that coverage is limited in both cases.

Firstly, insurers will look to which party was expressly required to insure the goods.

Property insurers tend not to offer unlimited blanket coverage for customers’ goods as it would be an unknown quantum. Insurers would want to know exactly what the customers’ goods are, their replacement value and the protection procedures.

The extent of coverage also depends on the circumstances surrounding the incident. Here are a few examples where coverage could be limited:

  • In cases involving theft in open air, the policy may not provide sufficient coverage.
  • If your equipment is left in the open air, storm damage is normally excluded if sufficient protection measures are not in place.

In summary, it’s crucial to familiarise yourself with the terms and conditions of insurance policies and understand the specific coverage provided for your goods.

For business with valuable portable items, we strongly recommend they insure these items via a specialist portable items policy.

Who covers the survey equipment hire costs during the stock shortage?

During the stock shortage at the beginning of the year, questions get raised regarding who will bear the hire costs for the survey equipment.

While certain policies may cover these costs for a limited number of days and up to a specific limit, it’s important to note that standard Portable Items policies typically do not include such coverage.

The takeaways

  • Never assume that your goods are automatically insured when they are in someone else’s care.
  • Consider other circumstances where your goods are being held at other premises (e.g. produce at cold stores; stock at 3PL warehouses, your vehicles at a mechanics) and review who is insuring these items at each location.
  • It is advisable to speak with your broker to ensure you have the most appropriate insurance coverage in these situations, thereby mitigating the risk of potential financial loss and business interruption.

To gain a better understanding of the coverage provided when dropping off your surveying equipment, please reach out to John Percey or your broker at PNOinsurance. They will be able to provide you with the necessary guidance and information.