ALLMI’s approved supplier for insurance services, AIPS Ltd, recently advised the Association’s members to review the contract conditions under which they operate.  AIPS Account Executive, Noel Marriot, comments “now, more than ever, keeping clients ‘on side’ is vital for the survival of many businesses.  With this in mind, plant owners should review the typical contract conditions under which the majority of plant is hired out.  These conditions are designed quite rightly to protect the position of the plant owner by passing responsibility for any damage or injury caused during operation onto the hirer, which, in most cases, is of no detriment to the owner as the hirer will accept responsibility for the plant and its usage.

The main area of concern for plant owners could be where they hire out an item of plant and supply the operator as part of the contract.  If there is any damage caused by the operator due to negligence then where does the liability lie for the resulting claim?  Typical contract conditions state that the hirer is still responsible whenever the plant is on their site; however, many of them would expect the owner to pick up the bill, as it is negligence on behalf of the plant owner’s employee that caused the damage. From an insurer’s point of view, there is a contract in place that precludes them from any liability and so unfortunately it will be very difficult to persuade them to settle an insurance claim which they are not legally obliged to pay.  Therefore, the hirer of the plant will have to claim from their own insurance.  This could cause that client to look elsewhere for services in the future which could greatly impact on the plant owner’s business.  You would expect that all parties involved would be fully aware of the contract’s terms, but this can sometimes be irrelevant if the hirer is unhappy due to being faced with a bill for thousands of pounds.  Although an alternative contract arrangement would pass the liability for any claims back to the plant owner and therefore, could affect their premium at renewal, if there is a claim, is the loss of a large client over such an incident more detrimental than an increase in insurance costs?  I think, in the current climate, this is a matter that is worth some consideration, as maintaining relationships with clients is essential in such a competitive market place.  For this reason, we’re encouraging members to review their policies to establish whether they permit plant to be hired out under alternative conditions.  As always, we’re more than happy to speak to members about this or any other insurance related issues, regardless of whether they’re currently clients of AIPS.”