Today's class, Introduction to Inland Marine Insurance Contractors' Equipment. I'm Eileen Monreale, Education Training Specialist for IMUA, and I'm thrilled to introduce this virtual class. Today is the first of four days that IMUA will offer the series of Introduction to Inland Marine Insurance classes. And today will be Introduction to Contractors' Equipment. Tomorrow, Tuesday, December 3rd, is Introduction to Transportation. And next Monday, December 9th, is Introduction to Builder's Risk. And we wrap it up next Tuesday, December 10th, with Introduction to Fine Art and Driving. All the classes are going to be from 2 p.m. to 5 p.m. And we all will be using the same join link. So you'll use the same link that you used today to join the classes. You will probably not be receiving additional links, so just hold on to that link in your calendar, and we hope to see you for all four of the classes if you can make it. Please use your question box on your control panel to ask questions. If you find your control panel minimizes by default and disappears on you, just right-click on the orange arrow to recover access to your control panel so it might collapse and open again. A PDF of the presentation is available from the handout material icon located on your control panel. Your instructor will announce a 10-minute break every 15 minutes, and we all learn best in an interactive environment, so Michelle looks forward to your questions. To encourage your participation today, at the end of the class, Michelle is going to announce the most-slash-best-engaged person, and IMUA will send them a $25 Amazon eGift card. This is just to keep it fun and show attendee appreciation, because we do appreciate your investment in your professional development. We know that everybody's very busy, and we appreciate your taking the time for this. Most importantly, we appreciate Michelle taking the time for this. As I know, Michelle is very busy also, so let's get started. I'm honored to introduce today's instructor, Michelle Sibyl. She is a graduate of Temple University with a Bachelor of Business Administration in Finance, and is Senior Vice President at Furman Foster. Prior to joining Furman Foster, Michelle was with Everest Insurance Group, where she was the head of Inland Marine and Builders Risk. Michelle started her career at Chubb, where she had held several positions, including management of property, machinery breakdown, inland, and ocean marine. Michelle also held inland marine leadership positions at the Hanover Insurance Group, ACE, and AIG, bringing a lot of experience to us today. Outside of work, Michelle is an avid Philadelphia sports fan and enjoys playing golf and boating. Please welcome Michelle Sibyl. Thank you, Eileen. Go Eagles! We had a good game yesterday. So, today I have the pleasure of talking to all of you folks about contractors' equipment, and please, as Eileen mentioned, ask questions. Let's make this as interactive as possible. You can put your questions in that question box, and I'll be happy to answer them. So let's get started. Just to give you an idea of the kind of our roadmap, we're going to start with really why is it important to talk about types of equipment and the operations of that equipment. Then we'll get to policy construction, and we'll end with underwriting and rating of contractors' equipment business. So we're going to start with a poll to get you guys all warmed up here. So what are the three largest inland marine classes by premium volume? So pick three. Contractors' equipment, transportation, builder's risk, installation floater, motor truck cargo, and fine art. So I'm just waiting. I'll wait for you folks to answer. Looks like you guys are pretty smart out there. Contractors' equipment, builder's risk and installation, and motor truck cargo are the three largest classes of inland marine business by premium volume. And so it's important to really understand those classes, and you're going to be presented with a lot of opportunities within those classes of business. So let's get to the next slide. We're going to talk about why is this important? Why are we talking about contractors' equipment? There is a lot of this business, it's one of the largest classes of inland marine. There are a lot of items that fall into the contractors' equipment segment, and those things range from small tools to large pieces of equipment like a $5 million or more crane. It's a big scope. Coverage does apply at when the equipment is used away from the premises as well as on premises. So these items can be anywhere. And as we know, construction spending continues to increase. We continue to see cranes all over the place in different cities, building buildings. And there are a lot of carriers that write this business. So you will come across it. In the next section, we're going to talk about the types of equipment and different operations. And this is a pretty robust section. So again, if you have questions, please, please ask them. So we're starting out in the excavation grading area, and you can see on the slide, there are a number of different types of equipment that you'll find on these job sites. The grader is the first one you see, and really the purpose of that piece of equipment is really kind of flattening the surface so that many times they can apply the asphalt or cement to that surface. They typically range in price from, again, it depends on the size, but $15,000 to $300,000 in replacement costs. So they can be pricey pieces of equipment. And then you see to the right of that, an excavator. These are large machines. They're used for heavy duty jobs like trenching, demolition. What's unique about this is that the whole cab there and that arm stretches out really, it really can stretch out far and that cab can turn 360 degrees. So it makes it, you know, there's a lot of things you can do with this piece of equipment. And they can dig further than a backhoe. So this is for your bigger jobs. You can, you know, typically the excavator, you can run from $200,000 to over a million dollars in replacement costs, depending on the size. And then obviously the new equipment, the more expensive it's going to be. And then you see the loader. That's a, it's also could be called a bucket loader, a front loader, a payloader. You really see this a lot in the construction sector, usually for buildings, public works, roads, highways, tunnels, really, or any activity that requires moving soil or rocks. And that piece of equipment typically runs between $10,000 and $250,000. You could see, you know, this, you can have total losses and a lot of these pieces, as you can imagine, and we'll get into the perils that you'll see what can happen to this equipment. Obviously theft is a big one. Fire is a big one. Overturn is also a big thing that we see and that can cause property damage to it. If you look, you see the bulldozer all the way to the right. That's that usually, you know, it's used for moving earth. It's an earth moving machine designed to push large quantity of soil, sand, and other loose materials. Costs typically range from $100,000 to $3 million potentially. So really big dollars there. And then you see at the bottom, you see a backhoe, that's really what's good about this is it can handle work on inclines or flat surfaces, very versatile. And they come with a digging arm that can perform many different tasks, digging some small demolition, moving materials, landscaping, that kind of stuff. And costs typically $30,000 to $200,000. Next to that backhoe, you see an earth mover. That's really a very heavy duty machine that's used to capture and transport soil, rocks, earth from one place to another. It can push materials, dig, and level the earth as well. From a cost standpoint, from $200,000 to $1.5 million, again, you know, depending on the size of that piece of equipment. And then lastly, the dump truck, which is used for really moving materials. And you see it a lot in the construction industry or on construction sites. And costs typically $100,000 to $250,000. So those are very common pieces of equipment that you see when you're involved in any kind of excavation, municipality, you know, water and sewer jobs. Does anybody have any questions there or if not, again, you can put it in the question box. And if not, we'll move on. Okay. Street and road is another big sector, an industry sector that we see a lot of. And the equipment that we see in that space is, we've kind of given you some pictures here. You can see it's a little bit different than we saw in the previous slide. You know, one of the big ones is the portable asphalt plant. And that really, that's, it's portable. So you could take it out to a site, you know, assemble it. And it's used to produce the asphalt that you use in the street and road construction and maintenance. Typically those, you know, that could run from $60,000 to $1 million on replacement costs of that type of equipment. And when you think about what could go wrong, it's, fire is a big issue in this case. So you're dealing with hot materials, very hot materials. So fire can certainly be a big, a big exposure that you want to keep an eye on and make sure that they have controls in place to handle that. If you look on the top right of the screen, you see the milling machine. And that really, that's used to excavate and grind the asphalt surface. So that'll take the asphalt and really, you know, mill it down to smaller pieces. Those machines are similar to, well, probably less than what you would find for the portable asphalt plant, but $20,000 to $100,000 in replacement costs. And then under that, you see the asphalt paver. So this is the actual machine that's used to pave the road or the parking lot or whatever it is you're working on. And it moves asphalt down conveyor toward the back of the machine and onto an auger so that the screen can distribute it evenly. And you can see how wide that machine is. You can see in the back, the asphalt coming down into the machine. Typical cost $10,000 or I'm sorry, yeah, $10,000 to, you know, $800,000, depending on the size. And you can see a lot, you know, some of these machines come in small and do-it-yourself sizes where you can do some of this work. Say you want to, you know, you have a project at home, you can, you know, you can rent some of this equipment to do the work. Down at the bottom, you see a concrete paver. So what this piece of equipment does is it forms and extrudes concrete continuously. And it allows precise control over the pavement's really shape, thickness, and the surface finish. These pieces of equipment are, you can see how big that is. There's different ages of it. And this can run upwards of, you know, $1,000,000 to replace. And last but not least, the roller, which is at the top. It's pretty obvious what that is used for, but it's that roll is really a heavy wheel that's used to level out and compact the terrain, whether it be soil, asphalt, dirt, really any kind of foundation or base material. And those, you know, can range from $15,000 to $150,000 in replacement costs. We do have a question here from Jay Powell. Thank you, Jay. I don't see many earthmovers these days. Are they only favored certain geographic areas? I think those undeveloped areas where you really need major clearing and a lot of areas they work with. I see them a lot. You see the other pieces of equipment a lot more often. That's a large piece of equipment, I think, that's sort of used out where there's a big job that's in need of that. Thank you for that question. All right, we're moving to recycling. This is an area that I don't know how much you guys have seen submission activity yet or how you're, you know, what your individual job is, but we do see a lot of recycling business, very difficult business, and we'll get into why. You know, many companies don't, like a company won't, this is not something that we really entertain because of the nature of the equipment exposures. But let's get into it. So you see, first you see a crane with a magnet on it, and you'll find this in these operations. You can see the outriggers on the bottom of that crane, and those kind of start to stabilize the equipment. And then you see the magnet on the end, and that's really, you know, gathering the material, that's to sort the material, and it really, it'll attract the material that has on it. So that's something you'll see at a recycling operation. You'll see this track loader as well. It's good to, you know, obviously it's going to move material with that bucket in the front. And it can also operate on some, in some uneven areas. Because of those tracks that it has underneath it, they aren't wheels, so it can go over soft sand terrain or, you know, any kind of dirt. Typically you find that that piece of equipment can run upwards of, you know, 200,000 to replace, should you have a total loss. And turnover, rollover is a typical type of loss that you find with that equipment. And many times it's, you know, you can fix the equipment, it's not a total loss with a rollover, but you can see significant damage. The upper right, you see a compactor, and basically that's just used to compress the waste materials into smaller sizes in a recycling plant. That is, you know, there's not a whole lot that goes on in that. Maybe you're looking at a replacement cost of 100,000. And then below that, you see a shredder, which is a tough piece of equipment. This is used to shred all the metals that come into the plant. And, you know, there's motors on that, there's cutting instruments. You know, similar to, you know, we think about paper shredder. Obviously, if you're shredding your own documents, this is obviously 100 times bigger than that, much more involved from a mechanical end, but big motors, big potential for fire as well. Obviously, maintenance is important on this equipment to keep it running properly and to ensure that you don't have a fire. And then, you know, lastly, just, again, recycling, tough, tough business. And it's fires of the exposure whenever you're looking at this business. The next class of business, quarrying. I'm sure you've seen some of this. I know some of you have seen some of this. I know we have a decent-sized quarry not far from me in Bridgewater. It's Chimney Rock. It's a huge quarry operation. And these are some of the pieces of equipment you could see in those operations and that you should be familiar with, right? So a dredge, you see that dredge machine that's sitting on the water? It's used to scoop sediment from the bottom of the waterways and it's used to mine materials underwater as well. So many times you'll see that in a quarry, especially a quarry operation that's close to the water or, you know, where you have water. You hear about dredges in, you know, when you talk about boating and things like that. I know that from my perspective, I love to boat and it's very important that they dredge some of those in less so that I don't unmount as we have to once or twice. So very important and similar. So right, you see a drag line. These, basically what you see there is there's a bucket that are placed above the material that you want to excavate. The bucket is lowered and the drag rope is drawn so that the bucket is dragged along the surface of the material. So it's clearing the material. The larger drag lines that you find are used in mine operations and in open pit quarries. So you see a lot of those. And then very expensive equipment. This is, you know, it could be upwards of, you know, two to three million dollars to replace it. Again, you can see, you can imagine you're dealing with uneven ground there. You could see an overturn of this equipment. The next piece of equipment, power shovel, right? So we use that, or we see that used in excavation and removal of a lot of the urban that's in a open cut mining operation. And it can also be used for loading materials such as coal. And you can see how it rotates on the base. Many times you will see it in mining operations besides the quarry. On the right, you see a stone crushing plant. So you probably have seen this if you drive up 287 or, you know, if you get further up the North, some of these crushing plants, it's used to really crush and process stones and rocks, make them smaller, put them into usable agates for construction or road building. Typically involves, you know, there's several stages of crushing and then there's screening. Sometimes they wash the material in there as well. It really depends on what they're using that final product for. And, you know, associated with this, a lot of conveyor belts. So you have motors that are associated with that, gearboxes, all of those things, maintenance is key. You can see it's a dusty environment there. So it's very important that maintenance is conducted properly and frequently. And that's definitely one of the questions, you know, to be asked when you're looking at and evaluating this business. Any questions on chlorine? I'll keep an eye on that question box. The next area we're going to look at is rigging and material handling and metal erection. You see a lot of this. Truck crane is one of the key pieces of equipment that you will see for this industry. And this is basically a boom truck. It's a transport vehicle that has, the crane's actually built into the truck and it helps to load and unload large goods. And this type of a vehicle, not only supports items, but it also can lift them to significant heights. And you'll see this on job sites. Again, the size will depend on what you're doing, but the truck crane, it's easily movable, right? You can drive it right to a job site and move it around that site wherever you need it to lift the different types of equipment or different materials that you're working with. Just to the right of that, you see a gantry crane. It's really a crane that's built atop a gantry, which is what that structure is. And it can range from a huge gantry crane to a gantry crane that might lift really, really heavy loads to maybe small shop cranes. And you do see, sometimes you'll see these overhead cranes within a shop and a very similar exposure as this one. And it'll move the equipment. You could take this and move, you could even move a boat on this, right? We have a small one of these at the marina and it will move out into the water, take it out of the water for storage. So, and then there's all different sizes depending on what, again, what your operation is. Below that, you see a crawler crane. And this crane is really a good crane to use for carrying large and heavy loads. Might be steel beams being moved or concrete blocks that you need to move from one place to another. It has a lot of lifting capacity and a really long reach. So, it's a very versatile crane. Definitely used, you'll see this used in the construction of bridges or wind turbines, heavy lift operations. So, that's where you typically find that one. And to the left of that's the hydraulic forklift basically. And that is used, you'll see that in, you know, you'll even see that in warehousing, right? And again, the size will depend on what they're moving around. But this can hold loads up into the air and move loads around the construction site. The tower crane is on the right. You'll see that some of these cities that you're seeing have been a lot of these to construct some of these larger buildings. And it can lift hundreds of feet in the air and it can reach out hundreds of feet forward as well. You can imagine that, you know, wind is a big issue. So, if you see these in Florida or in any of the NACAT areas, you know, it's important to know what is their procedure if they know there's an impending storm. Are they going to tie this thing down? They're likely not to be able to disassemble this thing because it takes a lot. So, if they can tie it down, that's great. But understand that where this is being used, the elements are really big exposure. And you can see that up top there, there are gears and motors that allow the crane to rotate so it can rotate around. The jib is what they call that working arm. Operator's cab is where the, there's a crane operator up there in the cab. They sit there and they control the crane's movements. So, I don't think I'd want that job. I guess if you like heights, you're okay with that. And typically, they can go up to 265 feet in the air and they reach out about 230 feet. And maximum lifting capacity, 20 tons. So, it's a lot. This is, obviously, this will be used in a large construction project, like a high-rise residential building, something like that, office building. Oh, good, we have a question. Let's see. Fancy Smith, how do you think about the cat exposure of the more static cranes? How vulnerable are these things to wind? And we just kind of talked about that, right? I think that when you look at some of the other cranes, the crawlers, or we talked about the truck, we can lower the boom on those. As long as you can do that, you're obviously less susceptible to the cat and wind. But on these tower cranes, you're going to have a much, much bigger exposure because you can't just lower or disassemble because that's all assembled, right? All of that scaffolding is assembled on site. And so, it's not easy to take all that down. So, hopefully, that answers your question. Quincy, good question. All right, logging equipment. So, here, you're going to see, excuse me, I'm going to get a drink. Logging and lumbering. So, this is another class of business that typically you might see in a program. There's a lot of logging programs you hear about, very specialized. Again, can be very difficult because logging business, you're leaving this equipment out in the woods. It's being used constantly. It's really important that you're shutting this stuff down properly, that you're, from a fire exposure, you're doing what you need to do in terms of ensuring that the equipment is okay when you come home at night, and that's the problem. It's still, it's out there amongst the elements. So, a lot of companies won't touch this equipment because you tend to have a lot of fires and equipment that burns up. The fellow buncher there is one of the key pieces of equipment for loggers. It's a self-propelled machine with a cutting head that's capable of, you can see, holding more than one stem at a time. So, it can grab a bunch of those trees and pull them out of the ground and cut them up. The cutting head's used strictly for cutting, and placing the stems on the ground. Next to that, you see a skid-steer. I'm sure you see these all over the place. These are used for excavating, digging, and trenching. It's great for moving gas, and it's very common on this kind of site. The chur is below that, you see a chur. It's really used to cut the tree limbs, trunks, and branches into chips, just like it states. And you can see it being loaded right into that trough. And then, the tub grinder. This is used to reduce the size of a debris pile. So, within there, you see the base of the materials through that machine. They're really cut up fine, and then they're poured out on the other end. It's into smaller pieces. Again, fire's a big exposure. You're not going to necessarily see the theft of a grinder or a chipper. Well, this size, at least. You could see skid-steers, which you'll do. Skid-steers are pretty common in terms of theft, and that's a big exposure for those. All right, energy. Energy exploration. I think we're going to do this. Joe, I was asked the question, prop cleaning during operation is critical. If debris is not regularly removed from the manifold, it will be attacked, and that's the challenge there. Ensure that it's being maintained and cleaned properly. Thank you, Joe, that's a really good point. So look at the energy exploration equipment. There's two key pieces of equipment used in those operations. And you see a drilling rig, and then you see, this is an oil drilling, and then you see a work over rig. The drilling rig is what sets these holes here at service, and it can be, it's a big structure typically, and you can see that it is here. It's used to make water wells, natural gas extraction wells, or oil wells. Very expensive piece of equipment. And, you know, again, I think some companies do get into the energy space. It's a very specialized space, again, and this is a very expensive piece of equipment. Millions of dollars depending on the size to replace that. And you see the work over rigs, but basically what the work over rigs is, it's used for basically assessing the well work, or sometimes to remove scale or debris from within the well, and or any kind of obstructions. And it's also used to prepare the down hole equipment. So this is really kind of the rig you bring into kind of the maintenance and work for that oil well. It's tough because a lot of companies won't, you know, touch these. Some do, and you see them in the energy space. So companies that are writing energy business certainly are looking at this. And then, lastly, we have small tools. So we hear a lot about small tools. Small tools, loaders, you know, this slide gives you an idea of what those are. A hammer is a small tool. Generators, you know, a generator can vary in size. From big, you know, that one is probably something you've got at home, a backup generator portal. I think I have one that looks like that one. And then compressors, that's what a compressor looks like. And these are what would fall under the small tools coverage. Some of the things, right, it's not inclusive of everything. So make these guys your friends. I think what's great is that we can, you can punch in, you know, you can type in compress, you can type in a drill, you can type in whatever it is, and you want to see operating, you can just get a picture of it, right? You know, Google is a great place to go. YouTube will show you the operation, and I think it's a great way to understand what you're insuring. I think it's important to understand what you're insuring, because once you see it, you can see what could potentially go wrong. And so, you know, as I always say, you know, operator error is a big issue. And if you look forms, we don't exclude operator error, right? So if you look at a lot of our losses, I can tell you a number of losses where the operator did something wrong, and that's basically caused the equipment to fail. Whether it be a rollover, or, you know, what, collapse, whatever it is, it's, so it's also very important to make sure that the training of your, of the folks that you're the insured has a robust training program, and these folks have enough experience when they're operating this equipment. All right, we're going to take a break in 10 minutes at 240, 250, so we'll take a 10-minute break, so we have a few to go over until then, so I'll let you guys know when we're ready. So that would include the equipment piece of it, right, the operation, the types of equipment, and now we're going to get into policy construction. And here's another poll question. There are three primary sources for inland marine coverage forms, so the organizations that actually offer the policy language. Can you name them? So I'm going to give you a minute. Actually, this is a chat, so hopefully people will chat in on the questions, so we'll see if we can chat into the questions, share your feedback with Michelle. Yeah, if you have any, in the question box, if you have some answers here, could you put them, just shoot them in there before I answer this? Oh, thank you. Right there, that's awesome. Yes, so that's AAS, the big one, and one lot of us use USO, it's the other one. They have a lot of marine forms, and then proprietary forms would be a manuscript, record manuscript or a company manuscript, right? A lot of companies have their own type, their own proprietary forms, like Gabler's and Chubb, Hartford, some of those companies, they have their own forms. AIS is what we use and has a robust forms repository, as well as rating guides to equipment, or really any kind of marine business. And we also talk about manuscripts, and they customize the program to meet the needs of a unique class of business, so you'll see some of that too. But thank you, everybody. What do we have? A lot of engagement from Jay Powell, Melody, Quincy Smith, Yolanda McFarland, Joe Serto again, John Aslan, Julie Hart, Teresa, okay, I'm going to say this right, Kate and Jocelyn. Thank you. I think Teresa got that one right. Joe, you can be a great source, so thanks for that. So, now we're just going to get into, you know, your scheme contracts, particularly, you know, it's going to provide a definition of what covered property is, and we'll talk a little bit more about this as we go through the slides. It'll also talk about and reference property that's not covered. Additional coverages will be mentioned as well. Cover causes a lot, so what are we covering, right? What are we, are we covering earthquake? Are we covering flood? What are we covering? Exclusions will be listed. Limits, so you'll have limits on your policy, excuse me, an overall limit of the policy, and then limits for some of your certain coverages, maybe certain equipment, things like that. Deductibles will be outlined in your policy. You'll have standard conditions and definitions, which are really important. Here's a poll, and maybe after this poll we will break, but so everyone get ready. The question is, non-owned equipment can also be covered by the contractor's equipment policy. Is that true or false? So you guys are really, you know this stuff already, we should just end the session now. 100% got it right. True. Non-owned equipment can also be covered, right? And you can see by this definition that contractors' equipment is machinery equipment tools. They could be owned by the insured or they could be owned by others. And they're in the, the key is they're in the insurance, care, custody, and control. And that's usually the key is they're responsible. For example, like leased equipment, the lessee is responsible for insuring that. So, all right. So it's now 2.47. Let's take a break until three. We're a little bit early. And then we'll get back on at three. And I'm going to pause it now. All right. Let's get back at it. We have another poll question. So, um. that apply. Cranes, automobiles, oil drilling, rigs, aircraft, watercrafts, property while waterborne. So I'll give you a few minutes, a few seconds here. So it looks like we have 56% that voted. Come on, guys, let's get that to 100. But thank you for those who voted. And again, you did a great job. It looks like, so the types of contractors, which of the following are typically not covered by CE policy? That would be automobiles, aircraft, and watercraft property while waterborne. So you guys, the majority got that correct. So nice job. And here we go. Automobiles, trucks, things that are designed principally for highway use are not covered by a contractor's equipment policy. Aircraft, that's definitely not going to be covered. There are other places you can put coverage for that. Watercraft is, again, not covered property. Property while waterborne is not covered, but you can add it back and put a sublimit on it. And we'll get into that in a little bit. And then property while located underground is typically not covered. However, again, you can add that coverage back and put a sublimit on that. And then contraband, obviously, that's illegal. So that would not be covered property. So nice job on that. Additional coverages, so in your contractor's equipment policy, you will typically see additional coverages that will be a section there. And typically, those have a sublimit. Hold on a second. I just did get a question. The Laney-Henry underground as in a tunnel underground? So no. Well, a tunnel would not be covered. But if there's equipment in a tunnel, it's underground. That would not be covered. So sometimes you find underground equipment used in mining, right? Or many times you'll have when you want to make a tunnel, a tunnel boring machine is used to dig through the dirt and the earth to create that tunnel. That equipment is typically is not covered unless you add it back by endorsement. So hopefully, I hope that answers your question. So additional coverages, so usually, they're subject to, you'll have a limit on them. So additionally acquired equipment, so equipment that you acquire after you've placed your policy. So typically, that's covered up to a certain limit and a maximum number of days, so maybe 90 days, right? 90 days to report your newly acquired equipment. And so for that 90 days, it's covered. After that, you need to report it. And then you need to make sure that you may have a limit of $250,000 for newly acquired equipment. If you acquire something that's worth more than that, you need to make sure you report that because you're not going to have coverage up to the limit of that piece of equipment. So that's something new to keep an eye on. Debris removal is another area that, or another coverage that is provided. And typically, the limit on that is it's provided up to 25% of the loss plus an amount designated on the deck. Sometimes the policy allow you to add something in addition to that 25%. And debris removal could be, for example, if you have a, suppose you have a fire on a piece of equipment and there's debris that needs to be cleaned up and moved. That would be in addition to the overall cost of repair, replacing that piece of equipment. Pollutant cleanup, so that's the expense to extract pollutants. And it must be sudden and accidental. So it can't be a slow kind of pollutant escape. If you have a piece of equipment and you have a loss on that equipment and oil leaks and gets into the dirt or say there's a stream next to the site that you're working on or a river, that would be, those expenses to extract it would be covered up to the limit that is provided under the policy. Preservation of property is another one. Those are expenses incurred to protect the equipment from further loss. So suppose you had a flooding event and flood was covered. The equipment, you want to move your equipment to get it out of that flooding area. So those expenses to move that equipment to higher ground would be where this would be covered under preservation of property. Rental expense reimbursement, so expenses incurred for rental replacement equipment. That's a limit to rent or lease replaced equipment should you have a loss to your equipment. And then two other additional coverages that you typically see are leased, rented, borrowed from others and leased, rented, and borrowed by others. So if you lease equipment from someone else, and we talked about that a little bit earlier, you may not own it, but you're responsible for covering that equipment. So that would be where you would find coverage. You've got to make sure your policy has leased and rented coverage from others. And then the same is if you rent equipment out of others, you would need to have leased, rented, and borrowed by others coverage because it's going to be in their care, custody, or control. And so you want to have coverage for that. And you would have a settlement. Here's another question. Joe Nezer, is there a case where gradual pollution is covered? I would say no, not to say that it hasn't ever been maybe a claim that's been out there, a loss that's been paid. But in my experience, gradual is not that. You need to buy a pollution policy for that. What we're trying to do is provide coverage as a part of the loss that occurred. It has to be sudden and accidental. So I don't know if anybody else has a comment on that. Joe Serto has another question, has another comment. Leased and rented may be subject to a time limit. I'm working up a new loss right now where the coverage is limited to 120 days and the insured has had care, custody, and control for 193 days. Good point, Joe. That does happen with leased and rented equipment because you don't want to provide coverage forever. And typically, equipment is rented on a, there's usually a time frame in the contract. And so you need to really look at your policy. Depending on what policies you're working with, contracts you're working with, it'll determine if there's a daily limitation or not. But that's a really good point, Joe. Thank you. You must be a claims guy. I know you are, so thank you for that. That's another thing, everyone. You can learn a lot from your claims counterparts. I think those are some of the best learning opportunities we have. And we try to do that on a monthly basis here where we have claims calls to talk about different claims that have occurred and some things that might be a little bit unusual. So that's where the rubber meets the road. It's when you have a claim on your policy. And it's a great opportunity to really see what can go wrong, unfortunately. So thanks, Joe. We have another poll. So here's a good one. Mechanical breakdown is typically a covered cause of loss. True or false? We need more votes. Come on, keep voting, everybody. Oh, we even have 70% voting. 72% voting. All right, good. Much more engagement. Thank you for that. So the answer is false, right? Mechanical breakdown is not a covered cause of loss on a contractor's equipment policy. We'll go to the next slide. This is where we talk about covered causes of loss. So you do need to look at your policy covered unless excluded. So look at those exclusions. And your typical exclusions that we've listed here, consequential loss. So does anybody know what that means? And answer me in the questions if you can. I think Joe already knows, but we'll see. Basically, consequential loss is it's a type of business. Business interruption is an example of that. It's a loss to income as a result of loss to a piece of contractor's equipment. So say you only have one crane, and the contractor has a job that he needs that crane for, and the crane ends up having a total loss because of overload or whatever to the piece of equipment. There could definitely be a business income loss, right? Because you can't use that piece of equipment that you need for that particular job. Typically, that is not, that is typically excluded on your contractor's equipment form. I will tell you that there are companies that will add income coverage back in, and there's options to do that. So keep that in mind. Business interruption or income is not automatically added. Dishonesty, so by you or your employees, if that results in a loss, whether it be, you know, theft, and you can prove that it was an inside job, it's not gonna be covered under the policy. Mechanical breakdown, which we talked about, right? Governmental action is not gonna be, you know, if there's a loss as a result of governmental action, it's not gonna be covered. Mysterious disappearance or unexplained loss, not covered, and rust, corrosion, wear, tear, decay, deterioration is not covered. So just because you have a piece of equipment that's corroded or rusting or not operating as it should doesn't mean that that's a loss, that's a cover cause loss, okay? Next, we get into limits of insurance, and this is what you see here is basically a schedule of equipment on the policy that will list the year, the manufacturer, the model, which is very important information, and the insurance amount, right? So it's really important that you get a detailed schedule when you're looking at a contractor's equipment policy, and it's very important so that you, you know, it's very clear when there's a loss to that piece of equipment, you know, it's listed, there it is, and you have your corresponding insurance amount. Yes. So, Serno, thank you, and Joe just said, and I was gonna say that you need to have a serial number, too. It's very important because you could have two Volvo A40Fs, right, which you do here, but maybe you have a third, and you didn't list it here, and it's not listed, so, and you don't have a serial number, so you're covering that even though it wasn't included in your schedule, so make sure that you get the serial numbers, and they have, typically, their schedules will have that, but here you can see the limits are clearly outlined, and this would be scheduled coverage versus blanket coverage, which would cover everything, so I prefer to use the scheduled coverage form because you're not, there's no surprises. Blanket, you know, if something's not listed or you didn't know about something, it'll be covered, and it's a much broader way to cover equipment, right? We have another poll, so let's see who can get this right. The vast majority of contractors' equipment policies use the following method of valuation. Actual cash value, replacement cost, stated amount, or none of the above. All right, we got almost 80% voted on this. So, once again, 57% of you were correct. The answer is actual cash value. Replacement costs, 30% of you said replacement costs. And so, many times, right, you're asked to provide replacement costs, and it is available. Marketplace, typically, you're going to be asked for, you may or may not as an underwriter decide for that, depending on the age of the equipment. I believe that, you know, you should really look at the equipment age and, you know, five years or older is typically what you're going to see for actual cash value. So, and then we come back to what the difference is. So, and inflation is very important because it will impact, you know, the cost of the claim. Actual value is replacement costs reduced by initiation of the set. And then replacement costs indicate to replace an existing asset with similar finding quality. Right. Some more common investments you'll find on contractors' equipment will see water line coverage is typically that, and it's sometimes, you know, it's a lot of offering that automatically with a small submit, but, you know, it can be endorsed. Usually, where it works in a place, if you have, say, a crane or a piece of equipment on a barge that's sitting there and you're doing some work that, you know, sometimes bridge work, you're going to have a crane on a barge that's doing some work to construct that bridge. So, you need to have coverage for that. Otherwise, you don't, you know, it's not covered. Um, deductibles, you know, a lot of times, it'll be, say, $10,000 equipment, $100,000 in value and under, and then $25,000 for everything over $100,000 in value. That would be an example. Percentage, you see this a lot, especially when it comes to some of the cat curls. So, flood or named windstorm, you might have a percentage of loss on the equipment subject to a maximum amount or a minimum amount, right? So, it may be, hey, we're going to, we're going to 3% of the loss for named windstorms subject to a minimum of $10,000. So, you do see deductibles that way and, and really, you know, you should look at higher deductibles on larger pieces of equipment, right? And percentages, like I said, if you have equipment that is in the South or in a cat, you know, in Florida, you may want to look at a percentage of loss subject to maybe a minimum. So, or you could do this, a lot of times you see that on, on crane, cranes as well. If you have a large schedule of crane business. Continuing rental lease coverage, you can endorse that onto your policy so that you can, you're, if you have a loss to a piece of lease to rented equipment and you still have to provide coverage, you can do that. Business income, we talked about that a little bit earlier that, you know, many companies, you're seeing that they are providing business income coverage on their equipment and it's being asked for. So, that is an exposure and it is something that's available out there and then underground coverage too. So, when I say underground, I mean, the equipment that's underground, that's being used to instruct whatever, you know, again, a tunnels crate, a great example, right? Of something that underground equipment wouldn't be used for. And typically, you'll see a limit on that. So, I mean, I would suggest you have some sort of a limit and a deductible as well. You can imagine the exposure there is a little, a little tougher because part of your challenge will be if there's a claim is how do I get to that piece of equipment and how, you know, is it, is it even worth it to have to go down and get that equipment or is it just, we're going to call it a day and say this piece of equipment is lost. And good point, Joe Sarno, again, downhole coverage for drills, yes, so, underground, that would be considered downhole coverage for drills, that would, that'd be an exposure that you would find as well. And it makes it tougher for the loss, right, if you're covering that when it's underground, but it's, it's something that is needed and is, you know, it's something that you can is, is available. All right, that covers the policy construction. And, you know, there's, it's very important to, to know, and I'm sure you guys know this, get this, but whatever forms you're using, get familiar with them. You know, there are differences. So, some companies use their own, some companies use AAIS, some use ISO, make sure that you understand them because they all are very different and, and some of your proprietary forms actually add in a lot of coverage and you can sell that, that, the broadness of those forms. So, just an FYI. So, now, the real, the real important part of this is risk selection, right? I think, you know, again, we're not going to go through everything here, but, you know, what are you going to be looking at, right? When you get that submission in, what is it that you need to take a look at and be able to take a, you know, take, be able to read through this and see, hey, is this, you know, do I want to go after this? And these are some of the things you should look for, right? What kind of contractor is it and what, what is the work that they're doing, right? So, the type of contractor, are they a drilling contractor, right? Are they, are they a logger? We went into that. What, what are, what kind of work are they doing? And it's, that'll determine what kind of work, obviously the work that they're doing, but also what kind of equipment is being used, right? And we went through some of that. What kind of equipment will you typically find? Now, you should have a list of that. So, if you get a logger in, you may not want to go after it, right? Because, you know, this is tough and I don't even know if it falls within my company's appetite or you might have a recycler that comes in. Is that really something I, the company wants to be writing? So, know the appetite of your company. Years in business is really critical, as you can imagine. You know, if, if, if you're, if you're insured does not have experience doing what they're doing, it's probably not a good, you know, I, I usually look at least for at least five years of experience and in doing what they're doing. And that'll give you a good kind of footprint of, you know, how their work has gone, how their losses have been. I think new operations are tough and you really will see them in business for at least five years so that you can get a good feel for the, the work they're doing and the quality of their work. You also want to look for the schedule, a descriptive schedule with accurate values. And we'll get into that in a minute because I think somebody, and I missed that question and we'll get to it, but, you know, where you find that, you know, where can you, where can you look, right, to determine if the values you've been given are accurate and if they're undervalued or not, and that, that's tough. They have a lot of tools for, for real property, fixed property, but for our business, it's a little more difficult. But you want to make sure you have a descriptive schedule, which we showed a little bit earlier and that you have accurate values because that's what's going to, you know, that's what you're going to be looking for in a, in a claim. And if you don't have that, you go back to, you know, go back to your broker and say, look, I need, I need more details here. And then loss experience. I mentioned this, you know, five years in business. In business, I also want to see five years of loss experience. Hard copy loss runs. And that means company loss runs. So you may get a summary from your broker and that's great. But you want to see the hard copy loss runs from the company where they were insured. And, and that can really, it can show you, have these guys had a lot of thefts? All right. Maybe they had some thefts in years, you know, one and two, but the past three years, they've been clean. Well, maybe ask the question, have they changed something? What are they doing differently? And many people find that. So losses don't scare me. It's what they've done and what they've learned about with that, with, with that particular loss. And I think that's the key. So here's a, here's a good one for us to talk about. Please put your comments in the questions box. But what are the two, the top two contractors equipment causes a loss? And we've talked a bit about this in the beginning. So maybe you can, there we go. Thank you. Fire and theft. Yep. Exactly. You can see, we kind of list them all here, but theft and fire are two key pieces, two key hazards that we have when it comes to contractors equipment. And we'll get into that a little bit better too. But Quincy says, what Depends on the type of contractor. To be super general, probably fire theft. Yes, thank you. Yeah, I'm talking in generalities. But those are the two key. And then collision analysm. And again, you know, this equipment, it could be subject to wind, storm, hail, damage, flood, and earthquake, right? So depending on, I mean, if you're providing coverage for flood and earthquake, typically they're included in your, they're not excluded. So they're included as a cover causal loss. And so that's something you need to consider if they're in a flood zone. And if they are, what should we be doing about it, right? Should we be, you know, putting a higher deductible? Should we be limiting the flood exposure? Let's put a limit on it, put a limit on the earthquake exposure. The next slide, we're going to talk a little bit about the cost of equipment theft. And this, this is from the National Equipment Registry. And I know it's 2016, the theft report, but it's that actually, that was the most recent one that I can find. Maybe it's me, but, and there really isn't a, there isn't a centralized database that we can go to. NER really does a nice job of examining some of these theft reports and they, they, they report, they'll report this information and they'll talk about trends and they'll talk about, you know, where it's happening. So it's, it's, it's really good information. The some of their conclusions, right, you can see here, annual estimates of the cost of equipment that vary from about 300 million to a billion. So it really depends on what's being reported. And with most estimates in the range of 400 million, that's big, that's, those are big numbers. Right. And, you know, some of what they did was with their analysis, the factors that contribute to that is really the value of the equipment. Right. So if it's expensive equipment, you know, they, they, they're going to steal it. Right. And one of the things that they found was the average estimated value of a stolen piece of equipment is almost $30,000. So, you know, when you're looking at your contractor's equipment policy premiums and it's, you know, 30,000 is, is, can add up. Right. So you need to, you need to make sure you're considering this. Let me, there's a couple more questions. Hold on. If a piece is stolen from a covered piece of equipment and it leads to a loss due to the missing piece, would the loss be covered? If a loss, a piece is stolen from a covered, well, if it's, if it's stolen from a piece of equipment, yes, it's, it, it could be a lot, it could be, they could consider, it might be considered vandalism because you took something off that equipment. But again, it's going to be subject to the, it's going to be subject to the deductible. Right. And so depending on what it is and you know, what the value is, it's, it may or may not even fall over the deductible. That was from James Liberto. Thank you. Here's another question. Statistics like this always bug me though. This is Quincy Smith. How big is the total owned equipment market? Is this 1% of equipment is stolen every year? Right. Impossible to tell with stats like that. And that's true. I don't have that number, frankly, the total owned equipment market that is, it's all relative, right. But I can tell you that theft is when I look at claims that I've experienced in the industry, working at different companies, theft is definitely one of the key hazards that we have to deal with. So it, it, it definitely is a big issue. You know, so if you have poor equipment and security isn't there, then you're, you know, you're, you're going to be, you're going to be subject to more of a theft, right. If you don't have any controls around your job site, that's going to impact your ability to keep that, that equipment safe. You know, some of the other factors, you know, the opportunity to sell it in the used equipment market, you know, it's very easy to get to unload a lot of stuff. You know, they're going to, if you can sell it, they're going to steal it. You know, part of it is low risk of tax and it's hard to find these folks, you know, doing a crime and the prosecution isn't always there. So people are, you know, willing to, willing to steal and then resell this stuff because they feel that, you know, hey, it's worth the risk. And that's into the lenient penalties for these if prosecuted and convicted. This, this chart really focuses on the frequency of theft compared with other risks. So you can see the charts there are the different bars that represent vandalism, fire damage, collision, and other, you know, other, which would be claims involving windstorm, hail, water damage, flood, earthquake, volcano, and then theft. And you can see that clearly that theft bar with the exception of 2015 was the highest. And it is typically where you're going to see your claims. I think second, we're talking about collision for the most part when we look at this chart. And this is, this information is coming from ISO's Inland Marine Circular for contractors equipment. And the, and the figures are based on frequency, not necessarily the value. So it's how many times. So again, good information. Another reason to make sure that you're, you're looking at how your equipment is being protected. And we'll get into things we should be looking at for our contractors to, to how can they protect their equipment better. So we'll talk about that. For collision here, this is Quincy. Are we talking over the road exposure or on-site collision? I think of these as pretty different exposures and Quincy, yes, they are. But I think here, I'm going to make a guess. I would think this is going to be at the job site, but I'm not sure. I don't have that information. So, but right, if you're going to, you know, over the road is going to be typically a bigger exposure. For example, I just had a claim come in, unfortunately, that involves a, a piece of equipment actually draws lines on the road and can erase those lines. You know, it's painted on, taken off, very big claim, close to, you know, a mile or so. Close to six, 700,000 for this piece of equipment. I'm not sure what the value of the claim is going to be, but, and I don't have all the details, but it's, it was a collision claim. So I don't know if somebody hit that piece of equipment. It operates on roads, so that's going to be its job site. But, you know, collision is definitely something that, that can occur to this stuff. Here's another good question. What is the theory behind not restricting various locations with equipment? How do we assess the risk? And this is Yolanda McFarland. And if I understand the question, the nature of contractor's equipment, Yolanda, is that it is mobile in nature. So you don't always know where it's going to be. A contractor does want their equipment at their site or at their office, right? They want to have it out on a job site. And these, these pieces of equipment can move constantly, daily. They may, you know, they may not be one place at any one time. So, you know, I'm not really sure what you mean about restricting. It can be very difficult to say, if you go to this location, you're not covered. I mean, we don't even know the locations. You're not going to get that information, typically. And to restrict it will be difficult. But what you can do, if you're concerned about locations within, again, flood, where you have flood problems, or where you name windstorm issues, you can put higher deductibles on those, right? And so for those perils, you can increase your deductible. You could increase your deductible for theft. Because, you know, that could be where they're seeing a lot of losses. And maybe they're, you know, operating in inner cities or, and you know that. So, but the nature of the equipment is that it's a contractor's equipment is that it is mobile. And that, you know, it's restricted to a location. It doesn't make, you know, really make sense. And many times you don't know where it's going to be. And that's the challenge of it. And here's some information on theft of, by type of location. So, again, is it on another person's premises, the insured's premises or in transit? And here you can see clearly that losses occur more on others' premises, right? So that's where they're doing the job. The contractor needs to have their equipment out there so that they're making money. They don't want their equipment to be idle. And you could see that when it's on their premises, that's probably the next highest and then it is the, the lowest for theft. All right. So here's a discussion. What, what do you think the worst state is in terms of equipment theft? Good. Great. So, here we go. Good answer, everybody. Theft by state. And you can see here the top 10 states for equipment theft in 2016. Texas, number one. And let's see. Who got that right? Oops, sorry. Let's see. Lindsey Neves, Austin, Josh Nielsen. Let's see. Paul McLeod, Jeremy, Dunn, Eslin. So, good. I mean, it's, and some other folks, you know, put some other, these other states in here as well. Oops, I went backwards. Sorry about that with the slides. But Texas, North Carolina, right? Florida, California, Georgia, South Carolina, Tennessee, Oklahoma, Arkansas, and Alabama. So, what I think is interesting here is the top five states do account for 45% of all thefts. So, those top five states, Texas, North Carolina, Florida, California, and Georgia are the tough ones, right? And the top 10 states account for 63% of all thefts. So, wow. That's big. So, important to know that information, right, when you're looking at an account and where they're doing business and where they're operating. You need to be, you need to be aware of it and make sure that you're comfortable with it. You know, some of the observations from NER were the thefts closely correspond to the amount of equipment in a particular area, right? In other words, the states with the highest volume of construction and agriculture, and therefore have the most machinery, have the largest number of thefts. That makes sense. So, where we're doing, where there's a lot of work being done, that's where you're going to find your most, most of your losses. Organized theft rings are developed in areas with high concentration of equipment and a large number of potential buyers have used equipment, stolen or otherwise. Higher loss ratios for insurers in certain areas reflect that development. That makes sense. And it looks like nine of the 10 top states for equipment thefts in 2016 are the same states that made the top 10 list in 2015. So, this is pretty consistent. And then their comment here, sometimes theft hotspots occur when an area is experiencing industrial boom. And you can see, you know, some of these states where like North Carolina, South Carolina, Tennessee, I mean, Florida, I mean, these, a huge boom in terms of industrial construction. And here we talk about the top 10 cities for equipment theft. So, the cities, right? So, Houston, huge, right? San Antonio, Conroy, Miami's big, right? You would expect that. Dallas, The other thing is another factor is the number of each type of equipment circulation, so they say that skid-steer loaders account for more than 36% of new construction equipment financed in the US in the last five years, so there's a lot of those out there, and you can see here 70% of this 80% of this 18% are skid-steers, and they say that the dozers and wheel loaders are the most valued types of equipment in the top ten, but backhoes and skid-steers are easier to transport and perform multiple functions on the job sites, which is something we talked about, right? They're very versatile, and typically anything that is stolen, the equipment that's stolen is frequently the wheeled machines such as wheel loaders, that, you know, and that we need to be monitoring, too, right? So, if we're seeing a lot of Fs in a certain state, you know, maybe we're not going to, maybe we don't want to write equipment in that state anymore. I don't know, and that's an internal decision that we might make. So, hopefully, Yolanda. And Yolanda, I did, I made your microphone that you can open it if you want to clarify. Yeah, I'm new to underwriting, so I'm just trying to get the, you know, I'm just thinking about, like, policies that I've seen in the past, and I'm just wondering if that's a part of, like, the thought process as well, as far as, like, theft and other, you know, scenarios as to why, you know, some policies have a minimum premium. I was just wondering if theft was, you know, one of the reasons why as well. I think when, that's, thank you for explaining that. I think that minimum premiums typically come into play, at least, you know, in my experience, really based on, you know, the cost to produce a policy and our expenses. So, we just set a minimum premium and say, well, this is what it costs us to produce this policy and to, you know, to, and all the work goes behind it. So, that's why we set our minimums a certain way, not necessarily because of theft. All right. Let's go to the next slide. And here, really, what we're talking about here is theft by manufacturer. So, I'm sure you guys are very, you know, or if you're not, these are the top manufacturers of equipment. John Deere, I think we all know you can, you know, John Deere is a well-known manufacturer. Kubota is another well-known one. And you can see John Deere is number one. And, you know, CAT is another one, Caterpillar. And, you know, the analysis that NAR did talks about, you know, while, you know, all makes of off-road equipment have little or no standard equipment security, the manufacturers on the list at the left make the most compact and thus most easily stolen equipment. Right? So, you know, when you think of John Deere, you think of, you know, those ride-on mowers or, you know, some of their equipment that it is very compact and it would be easily, pretty easy to steal it. So, it's, that's something to think about when you're, you know, when you look at a schedule of equipment, you can think about these, you know, manufacturers and then look at your schedule and see, you know, who manufactures this. And again, using Google to look it up and using YouTube to understand how it's being used will tell you, you know, the holy code of theft. And it also, one of the pieces of the analysis here says if two pieces of equipment are equally easy to steal, a thief is more likely to steal at a greater value. Age, condition, and brand determine a machine's perceived value, perceived value. Right? So, if, if, if it's between John Deere and Kubota, John Deere's a lot more, you know, well-known and we see that, you know, see a lot of marketing on that piece of it, we may be, you know, you know, your thieves are going to be more likely to steal the well-known equipment. And then I thought this slide was good because we talked about what we, what we can do, what can our insurance do to avoid theft, right? Or to at least make it, to keep it a lot safer, right? Avoid leaving your equipment unattended in remote areas. Well, that's a no-brainer, right? In terms of even, you know, from a fire standpoint, make sure, you know, install hidden fuel shutoff systems. And, and also that, that's for, that's, that's for theft too, because if you can't start it up, then you can't, you know, it's harder to move it. Same with, you know, fuses and circuit breakers, you know, remove that when the equipment is unattended. Render equipment immobile or difficult to move after hours or on weekends. I thought this was interesting by clustering it in a wagon train circle. So you place more of the easily transported mobile equipment, such as generators and compressors in the middle and surrounded by the larger pieces of hard to move equipment. And you will see that sometimes, like I've seen that on different accounts. And even at construction sites that I've visited, you know, that's kind of their process. That's how they close up. So that's, that's a smart way to do it. And then, you know, installing anti-theft or recovery devices, which NER, National Equipment Registry, that's part of what they do. And a lot of this equipment comes with anti-theft devices so that you can track your stolen equipment. Problem is a lot of thieves know how to, you know, dismantle that stuff. So that could be a challenge, but that stuff should still be there. Yeah, I think it's also important that any thefts are reported to the police because the sooner you report it, the more likely you are to, to get it back and make sure you notify your insurance company. Holidays and downtimes, you should be implementing and implementing additional measures. And here we say register your equipment with National Equipment Registry because it's a national database that has all the information in there. And when there is a, is a loss, they can keep an eye out for that piece of equipment. They have a huge network. Maintain a photo archive and specific list of the pin and component parts, serial numbers of each piece of equipment. Obviously, that's very important in stamps or engraving equipment parts with certain marks that'll, and your logo for your company that obviously that'll stand out. And lockout devices are good to use to secure them so that they can't travel or move the stuff in a straight line. So that's a deterrent. Put a sleeve lock to fix the backhoe pads in an extended position. Keep the wheels off the ground. That'll do it. Install a system that disables the electrical or ignition system if universal keys are used. So these are all good things to, to help you mitigate some of these, help our insurance mitigate some of these theft losses. We do have a question. Is there any seasonality or times of year when we see theft go up? That's Samantha Orlak. I hope I didn't mess up your name too much. You do see some of this go up on extended times of shutdown, like holidays, you're going to see it or weekends, you know, holidays like July 4th. And, you know, typically you're going to see, I say July 4th, because I've seen, I've had a loss or two occur at that time. So it's, it's extended periods of downtime, but you're going to see thefts go up. All right. Now a little bit about some of the other perils that we have. Right. So fire, we've talked about a little bit that it is something that you need to be, you know, concerned about with equipment. You can see here there's a picture of a forklift that's caught on fire. right? If it's in in the insurance yard, you know, what is it stored around? Is it, is there any protection in that yard? Is there, or is there like a somebody that's they have a watchman there or something? Is it fenced? Really that's probably more theft, but fenced will prevent maybe vandalism, fire vandalism, but protection is important. Also the the spread of the stores, so how big is that site, right? Is it a, is it a big job site or is it a smaller more contained area? Because, you know, smaller more contained, you could, you could have, you know, if one piece of equipment goes on fire, it could spread to another, so you need to look at that. That's concentration of values in one place and how likely would it be that that could cause loss to more than one piece of equipment. And then the operation, so fire in terms, in terms of the the operational equipment, so we talked about this again earlier and I think Joe mentioned this as well, you know, making sure you clean out your equipment, so your, your preventive maintenance schedule with the defined responsibility, right? So who's responsible for this, this maintenance of the piece of equipment? It's important to know that. Ruptured hoses is a big, a big issue. I mean those things are things that you need to maintain and replace, just like on your car. Inspection schedule, what is the protocol when it comes to inspections? You know, a lot of times your insurer will have a checklist, right, of things that need to be inspected on a daily basis. You should ask those questions and your, you know, your submission, you know, should contain some of that information, especially for your large schedules of contractors' equipment. And Joe mentioned this, combustible material removal, yeah, are we removing, you know, some of that logging equipment, are we removing debris from it once it's, once it's done at the end of the day, right? Because the more you have there, the more, if it's combustible, that material is still there, that, that's going to make it even worse. So making sure that, that they have a clean-out process for that. And Joe put something here, the operator must inspect prior to shift start and again at shift end, right? Usually the insured staff performs late PM, right? So what he's saying is the operator, typically in, you know, what you'll find is that the operator of that piece of equipment is responsible for inspecting it prior to the shift start and then at the end of the shift. And then usually the insured staff performs the, the late preventative maintenance. So, you know, that's really defining who's responsible for what when it comes to this. And then portable fire suppression extinguishers. So that is, that is, that is key. And, and you should have that available on the job site. If not, sometimes you have it on the equipment. So you should be looking for that as well. And then flood and quake. And as I mentioned here, you know, if you have, you see on the right, there's a, that's some kind of a crane, maybe a crawler crane. You know, are you in a, is the, is where you keep the equipment, is it in a flood zone? And you should be looking at that. You should be asking the question, how much typically do you have your yard at any one time? And again, contractor wants to have their equipment out of yard because they want money. They want money. They don't want idle equipment sitting there. But, you know, I've had losses where equipment sits, is sitting in the yard and there's a flood, it's in a flood zone. And, you know, no one even looked to see that that was a flood zone. You might not have total losses, but you're going to have significant loss. And sometimes the flood won't exceed kind of the bottom of the piece of equipment, depends how high it rises. But if you have to clean out that equipment or if it fries the electrical part of it, it can get pretty costly. So, you know, make sure that you're, if you have, you know, make sure you get the yard information and the location information so that you can model not only flood, but quake. And, you know, you may decide to put a subliminal flood and quake. You may decide to exclude flood and quake. It just depends on, you know, how you want to handle it. A lot of times you'll see because remember flood and quake is covered, right? We don't exclude it on the policy. It's normally covered. So, so you want to make sure that if you're, if you know you're in a flood zone, which you would only know maybe your own yard, you could be a flood zone at an insurance location too, but you may not even know where that location is. But if you see prior losses from flood, you may, you may want to put some kind of limitation there and, and a higher deductible as well, which, which is not unheard of. All right. So we talked about a lot of stuff, right? And we talked about underwriting and things to look out for. And then there's the other piece, right? Where you're, you know, you have to price your account and how do you rate your account? Now, every company's different. So if, if you're, you know, certain companies have their own rating platform and they're, you can go in there and rate everything up. Some use the AIS rating or ISO rating. So there's, there's different ways and theories on, on how to do it, depending on if you're, you know, it's a file class or if it's, if it's admitted or not admitted. So, but with all of it, with all of this equipment, we start with a basic rate and it's usually, you know, just to give you an idea, you're going to have higher rates for cranes because there's a higher chance that there's more exposure, right? So they're more risky, right? A lot of things can happen to them and definitely operator error is a big issue when it comes to crane business or crane equipment. And you know, if the, if, if, if there's some sort of, you know, cranes typically have a rating in terms of how much they can lift. If you exceed that, you could, you know, that could be an overturn. And so you need to make sure that your, your rates are going to be higher for cranes because of that. And then lower typically for yellow iron equipment, which is your skid steers, your backhoes, your forklifts, that's what they call yellow equipment. And then you take that basic rate, right? And then you, you, you're going to load the rate. And these are all the things that kind of impacts the load of that rate. Business tenure, right? So how long have they been in business? Do they have, you know, or, or are they only five years in business? So you might debit the rate, right? You want more because of that. What's their loss history been? So if it's, if it's been poor, you're going to, you're going to debit that rate and you're going to make sure you account for some of that. If they've been clean, you know, you're going to, you're, you're, you're not going to have, has a high of a load on that rate for better loss history. Age of equipment, right? You, you may see a schedule that has a lot of varying, you know, equipment ages. So if, if most of it's newer, you know, usually that's, that's, you know, you're going to, you're going to credit that account. If it's older equipment, to have more issues is higher, right? So you're going to debit that, that rate. Conditional equipment. Is it being maintained, right? Is it, is it in good shape? You know, maybe it's 10 years old, but they really, they are all over the preventive maintenance, just like your car. Do you maintain your car, right? If you do the oil changes, you rotate the tires, you, you know, you do things, you replace all the filters, like you do it, all those things on schedule, that, that, you know, car is going to be worth more, right? And, and I'd be more comfortable ensuring that than, than one that isn't, you know, isn't in the best of conditions. The same with equipment. Operating terrain. So where are they operating? Are they operating in a hilly, you know, rough terrain? And we know what can happen there. Or is it in a flat, you know, flat area? That'll determine whether or not, you know, that equipment has, you know, a bigger chance of, operator training and experience, big, big, big issue. The more that your operators are trained, and the more experience they have operating that equipment, the better off you are. And you ask that question. You know, that thing, certainly the casualty market looks at, and, you know, that, that broker should have that information or be able to get it from the, from the insurer, because they're going to need it for their comp and their, their liability stuff. So even if you get information on a liability application, it's going to give you an idea of their operators training and experience. And again, that's a, that's something that is invaluable on this business. And then, you know, theft, vandalism, malicious mischief potential. So is this in a, in a, in a urban area? Is it in the middle of the city? Is it protected? Is it fenced? Is it, you know, you know, all those things impacts the potential of vandalism, somebody going out there causing a fire, you know, kids playing on the equipment, that kind of stuff. You should, you know, considering that based on how they protect their equipment and where it's being operated. And leased and rented equipment. The rating on that's a lot different. And it's, it's usually, so what's based on is receipts or expenditures, depending on if it's leased to or from, and then it's, it's typically a multiple of your, your, your base rate against, so it's not really against the TIB, but account against the receipts or expenditures. And again, your rating will, your, whatever rating plan you have, I mean, that there's usually an outline of how to, how to rent, rate that, but it is looked at a little bit differently because we don't have all this information necessarily for that. All right. That's a lot of info. We're almost at the end guys. So good job. Garbage in, garbage out. Valuation. So we, we did talk about valuation, right? And, you know, different ways to value your equipment, whether it be actual cash value, replacement costs, reported or stated value are used a lot, but lower values equal less premiums paid. So think about that. If you're insured, you know, sometimes they think, yeah, I'm going to go on the low end of that, you know, the value for that piece of equipment. And, cause they don't want to have to pay more premium, right? So don't assume that the reported values are accurate. And then we'll get into, there's a way to check that, right. Or at least have some idea of what the cost of the equipment is. So there are resources that are available that are used. I've used Sheener Trader online. I just, in the, on the internet, this contractor's hotline, I have not used that. But I know others have, and it's, these are good ways to determine if your equipment is being properly valued. Okay. And there's things that impact it, right? The condition of the equipment, the age of the equipment, right? The size of the equipment, but you should have all that information to be able to determine if that's an accurate number that you're getting from the insurance. So don't just take it for granted. Make sure you're, you know, you're looking at that. And then don't be afraid to use co-insurance either. That is still used. And, you know, you can put some co-insurance, your policies, your contracts allow you to do that. So here's the difference. Let's look at an account, right? Say we have a piece of equipment and we're going to, we're going to cover it for $50,000 on our insurance policy, but it's really worth $100,000 to replace it. Okay. And we have a $25,000 loss. So how much would be paid? I'll repeat it. And you can put this in the questions. We're going to insure this piece of equipment for $50,000, but it's really worth $100,000. And we had a $25,000 loss on it. How much would we pay if there was co-insurance? Based on this formula. Let's just say based on this formula, Quincy. So just take the insurance carried over the insurance required times the loss. Right. Right. Okay. So Rachel, right. Rachel Smith, Don, $12,500. So think about that. All right. Think about the fact that they're basically, they're 50% underinsured and their loss was $25,000. Right. Okay. They're only going to get paid half of that. Based on this formula. Many times your policies are going to have a co-insurance percentage. I don't want to get into all that right here, but, but the point, the point is co-insurance is a good tool for you when you are, you know, looking at insuring equipment. And if you can use it, it'll help you when it comes to, you know, making sure that your values are accurate. So that is it to cover. Are there any final questions? I mean, you have the question here. Is there anybody that wants to speak? If you, comments, questions, you can let me know in the questions box and I can have Eileen turn on your microphone. Again, this is very much a intro and kind of the basics of contractor's equipment. It's a good start and it's a good introduction to it. There's a lot to it and experience certainly helps. The more you do it, the more you learn. I think the IMUA is a great organization and I'm glad you attended this. There's so many resources on the website that you can use and make sure you do because there's all kinds of things. I constantly find new things that I'm able to find and use. Is there somebody online? We're constantly adding more, so always check back. Any final questions there, Michelle? Yeah, so I have a question from James Liberto. Your favorite CE industry appetite, logging and recycling to operate in? Well, it's not logging and recycling. So I stay away from those. I've had good experience with street and road. Again, there's qualifications on that. Yeah, it depends how much are you paving. How much are you paving? There's a lot of exposure there with washout and that kind of stuff, but that typically is good. I mean, I will tell you that I used to write them, you know, not that I don't hear, our appetite's a little bit different, but crane business is tough. But I find that if you get those, they can be tough accounts, but if you find those that are doing all the right things, right, the operator training is there, and they're well-organized, the maintenance is there. You know, that can be decent business. We have another one here. Do you see the market softening toward classes that have not always been profiling risks? That's from Rachel Smith. Yes, I do think that what'll happen is, and you know, we all do it to ourselves, but I think that, I haven't seen it yet, I should say, but you know, I've been around long enough to only imagine what could come down the pike. We are starting to see a softening in the line of business. And you know, I think as companies get, you know, they want more market share, they're gonna open their doors to maybe some of the tougher classes, right, because they see some premium there, and maybe they haven't had that loss experience themselves. And so I can imagine that that may be, that could come down the pike. So that's a great question. And you know, Inland Marine is the business that a lot of companies wanna write, because it's profitable, and you can get into it pretty easily in terms of even admitted business, right, because it doesn't take a lot. But I think the challenge in what many companies don't realize is, or they don't take as seriously is that you need to have some expertise, because it is, it's very specialized. And you can see there's so many nuances to it, right? And there's so many lines of business within Inland Marine that it's an area that, you know, you have to know a lot of different things. And to me, that's why it's so interesting and why I love it so much. But also, it's a challenge because you're not gonna know everything, but you need to have people that have some experience in the business. And then lastly, oh, Joe, Joe Scarno, if I interrupted too much, my apologies. No, you did not. You had some really good comments, and I'm sure from your experience, things that we can all learn from. So that's great. And I think that's it. There's the IMUA, contact info. Excellent. Yes. Super. Thank you so much, Michelle. This is fantastic. The time absolutely flew. So we appreciate your sharing your expertise and keeping everybody engaged. I really appreciate that. I also wanna thank my colleagues, Allie Monreale and Lillian Folson, for working to coordinate today's session. They're both also on behind the scenes and helped get us up to today. I want to also share that IMUA's annual meeting is scheduled for April 13th through 15th in Bonita Springs, Florida next year. Hopefully Michelle is attending, and you can meet her there, and perhaps even play a game of golf, because it'll be right on the golf course, and we have a half day of recreation. So you can either golf, or this year it will be kayaking. So if you can somehow fit that into your calendars, we'll mark it down April 13th to 15th. There'll be about 400 people in attendance. Registration will open in January. We have two days of education, really great speakers lined up. So keep your eyes on your emails. That email will be coming out within the next month. Michelle, are you ready to announce the most slash best engaged winners? I think it was pretty obvious and very helpful. Joe Scurno is the winner, and he was very engaged. So he's the winner. Excellent. Congratulations, Joe. Keep your eye on your inbox for a $25 Amazon e-gift card on the holidays who can't use that. So congratulations. Thank you everyone for your participation. There was a lot of really great engagement. Hopefully you can all join us tomorrow for the introduction to transportation class. Also from 2 p.m. to 5 p.m. get out a little early today. That's fantastic. A reminder to use the same link tomorrow that you used today, it's the same link. So please everyone enjoy the rest of the day. That ends today's class. Thanks again, Michelle. Thank you everyone. You're welcome. Thank you. Bye-bye.

debris removal coverage

additional acquired equipment coverage

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contractor's equipment policy

exclusions for automobiles

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flexibility in coverage

split deductibles

endorsements

wind event damage

underwriting considerations

rating considerations

theft prevention strategies

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Inland Marine Insurance

Contractors' Equipment

Eileen Monreale

Michelle Sibyl

equipment insurance

premium volume

excavation

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recycling

risk evaluation

underwriting

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policy construction

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