Plant and Machinery Insurance for Australian Residential Builders

What it is

Plant and machinery insurance covers the higher-value mechanical equipment a residential builder owns or leases for construction work. The cover sits above tools-of-trade in value and complexity. business.gov.au lists machinery breakdown insurance as cover for the repair or replacement of broken-down machinery, and identifies asset and revenue insurance as cover for the loss, damage or theft of work-related assets.

Plant and machinery splits cleanly into two cover types that insurers price differently. Fixed plant cover handles items that stay in a workshop or yard. Mobile plant cover handles items that move between sites. A residential builder almost always needs mobile plant cover, because almost nothing in residential construction stays in one place.

What counts as plant

For insurance purposes, plant is the equipment used to perform the work, as distinct from the work itself. A bobcat, an excavator, a scissor lift, a concrete saw, a compressor on a trailer, a generator on skids and a kerbing machine are all plant. A nail gun is a tool. The dividing line is usually weight, value and registration status. Plant requiring a high-risk work licence under state WHS regulations or registration as a plant item with the state regulator almost always sits in the plant policy. Most jurisdictions require registration of certain plant items, with the threshold and process varying by state.

How the cover responds

A mobile plant policy responds to:

• Accidental damage to the insured plant during operation, transit or while stationary on a site
• Theft of the plant from a site, a yard or a trailer
• Fire, storm, flood and impact damage at any insured location in Australia
• Damage from overturning, falling objects, electrical fault and operator error within the policy definition

Most policies cover both owned and leased plant, with the leased item listed on the schedule and the leasing financier noted as a co-insured. Hire fees are usually covered separately under a business interruption extension or a hire of replacement plant extension, which pays the cost of hiring a substitute while the damaged item is being repaired.

Mobile plant vs fixed plant

Mobile plant cover travels with the item. Fixed plant cover is tied to a specified location and only responds while the item is at that location. A residential builder who owns one bobcat does not need fixed plant cover at all. A builder who runs a fabrication shed and a yard might need both, with the mobile section responding to the bobcat anywhere in Australia and the fixed section responding to the workshop press.

Theft, the biggest exposure

Plant theft has the largest claim values in the section and the tightest conditions. Most policies require:

• Plant left overnight at an open site to be immobilised, with the keys removed and stored separately
• Plant left for more than 72 hours at an open site to be locked in a yard, secured to a fixed point or fitted with a tracker
• The site to be fenced and the gates to be locked at the end of each day

A bobcat sitting on the front lawn of a knockdown rebuild over a weekend with the keys in the ignition is the textbook uninsured loss. Insurers regularly decline these claims because the policy conditions on theft prevention were not met.

Damage during operation

Damage caused by the plant to third-party property is not covered by the plant policy. Third-party damage goes to the public liability policy. The plant policy covers damage to the plant itself. If the bobcat tracks crack the neighbour driveway, PL responds. If the bobcat falls off the float and is written off, the plant policy responds. Two policies and two deductibles apply, and the builder needs to notify both insurers.

How to read your policy

Confirm the schedule lists every owned and leased plant item with model, serial number and current market value. Confirm the basis of settlement: market value (depreciated) or agreed value (the figure on the schedule). Agreed value costs more but removes argument about depreciation at claim time. Read the theft conditions and confirm the builder can actually comply with them on every job. Read the hire of replacement plant extension; the daily limit and the maximum period are the two numbers that decide whether the builder keeps trading after a write-off.

Common gaps

Subbie-owned plant brought to site by a subcontractor sits on the subbie policy, not the builder policy. The builder should confirm at engagement that every subcontractor running mobile plant on site carries their own insurance. Loaner or borrowed plant from a mate is rarely covered automatically; most policies require borrowed plant to be notified and added by endorsement.