If you own a trade, construction or truck company, you’ll know that you need to be on top of your game when it comes to plant and machinery. But how do you decide whether to purchase the equipment outright or hire?
In this blog, we highlight the pros and cons of plant and machinery hire to help you choose the right option for your business.
What are the advantages of hired-in plant insurance?
There are five main benefits of equipment hire:
1. More cost-effective
Purchasing equipment outright is a big investment and it’s simply not feasible for many businesses. An advantage of hiring plant and machinery is that you only pay for what you need and when you need it. This can help you allocate your funds more effectively.
2. More flexibility
Construction and trade work can change quickly due to the weather, availability of resources and change of project plans. Hiring gives you more flexibility to choose equipment when you actually need it, which removes the risk of wasting money on equipment that you no longer need.
3. Try before you buy
If you’re in two minds about whether to buy machinery, hiring is the perfect opportunity to do a test drive. It could save you thousands on buying machinery that isn’t quite right for the job.
4. Avoid maintenance costs
Buying machinery comes with the added responsibility of maintaining upkeep and mechanical costs. Most equipment needs servicing every year and you will also need to ensure you have adequate insurance in place.
5. Use the latest equipment and machinery
Technology is fast-paced and machinery can go obsolete or be replaced by better models every few years. Hiring gives you access to the newest models and equipment that is serviced regularly.
What are the cons of plant and machinery hire?
Machinery hire isn’t right for everyone. Consider these cons before making a decision:
1. Limited availability
Machinery hire is a flexible and practical option for many businesses and this can sometimes mean that the particular machinery you want is unavailable – especially in peak periods or if you have a last-minute job. Plan ahead when possible to avoid missing out.
2. Higher daily rates
Although it’s usually cheaper to hire machinery as you only pay for the time you actually need it, the daily rates are fixed and this can rack up a high bill over time. If you have a longer job it might be cheaper to buy outright. Estimate how much each option will cost to determine which offers more value for money.
3. You may need to pay a large deposit
While renting is generally more cost-effective, you will need to put down a deposit in case you damage the machinery.
Carefully weigh up your options and remember that what’s right for your business might be different than others.
Do I need insurance for the hired plant and machinery?
When you hire plant and machinery it’s important to understand the terms and conditions of the hire agreement. For example:
- Is it a dry hire agreement?
- Is it a wet hire agreement?
- Is there a minimum rental period?
- Is personal protective equipment needed?
- How is the machinery used?
Some hire contracts will provide cover in the event that the machinery is lost or damaged, while others may not. A hire agreement may also include a damage waiver which is when you pay an extra fee to cover the machinery for the full lease period.
However, damage waivers may provide limited cover for fire and theft only which can leave you exposed to other risks. For example, you may be liable to pay for accidental damage that occurs while operating the machinery, or worse still, to cover the costs if it is stolen on site.
If your rental agreement offers a damage waiver, make sure you understand the extent of the cover in addition to the insurance excess if you make a claim – this can be particularly high for specialist plant machinery.
If you hire machinery, the key takeaway is to read the fine print. It’s not worth the financial risk and headache of skimming over the details.
What is hired-in plant insurance?
Hired-in plant insurance is for businesses that are hiring plant and machinery regularly. It generally offers more reliable and comprehensive cover than a damage waiver and protects you against the financial burden of settling a claim.
Hired-in plant insurance usually offers damage, fire, theft and transit cover. Some insurers may offer liability as part of the policy, but you may need to add this as an additional policy. This is recommended for businesses with a high risk of third-party property damage and personal injury.
Get a hired-in plant insurance quote today
Truck Insurance HQ is a specialist insurance broker for the truck, transport and earthmoving equipment sector. Our brokers have worked with business, contractors and tradies of all kinds and we know how to find cover designed specifically for the needs of you and your industry.
If you have any questions about hired-in plant insurance give us a call on 1300 815 344. You can also request a quote online.