Just run through these four musts to be sure you really are insured adequately
BY GRETCHEN LEE
When the Bellevue Rental Center in Bellevue, Neb., suffered a devastating fire on Aug. 1, 2004, owner Dan Smith had no idea at first how much had been lost. Only the heavy equipment outside the building was salvageable. The flames destroyed his building and the inventory inside — along with all of his records.
That didn’t stop Smith from jumping back into business the very next day. He and his family set to work renting the remaining equipment from the yard. They created a makeshift office in a trailer borrowed from a friend, a local Honda car dealer.
Over the next few weeks, Smith took inventory of the damaged equipment and asked his old suppliers for copies of his original purchase invoices. Slowly, he was able to assess the value of what was lost in the fire — and discovered he was woefully underinsured — not by design, but because he’d only guesstimated the value when purchasing an insurance policy. The real replacement value of his inventory was twice the amount of his insurance coverage.
Do you know the value of your rental inventory? Can you say exactly what it would take for you to rebuild your business after a catastrophic event? If you don’t know, you’re not alone. Many stores don’t know the value of their businesses, and, as a consequence, they aren’t insured to value — which could put them out of business should disaster strike.
What’s worse, some rental store owners who do know the value of their equipment actually choose to underinsure their businesses — preferring to save a few bucks even if it means rolling the dice with their livelihoods.
Happily, Bellevue Rental Center has been able to recover. Though he wasn’t able to collect enough from his insurance company to cover everything, Smith was able to get a Small Business Administration-insured loan from the bank and began placing orders on equipment. Now he’s in a new building and is steadily rebuilding his inventory and growing his business back to its pre-fire level.
There’s a lesson or two to be learned here. If you want to be able to cover your losses no matter what unfortunate circumstances come your way, always insure to value and heed these four musts:
1. Maintain an accurate inventory. They say close only counts when playing horseshoes or throwing hand grenades, so focus first on creating a flawless accounting of your inventory. You’ll need this inventory to get an accurate insurance quote. And keep an up-to-date copy of your inventory off-site, along with copies of the original invoices for your equipment, because you’ll need them again if you suffer a loss. You might also consider storing photos or a videotape of your inventory off-site.
2. Count everything. Include things like the parts you use to make repairs — even 25-cent items add up when you’ve got thousands of them! And don’t overlook things like the value of your counters, shelving and workbenches, your computer system, your employees’ tools and customers’ equipment that may be on-site for repairs.
3. Get the right limits. It doesn’t pay to scrimp when it comes to insuring to value on your rental equipment because the pricing is based on decreasing increments. It’s almost like a quantity discount — the higher the values, the lower the rates. Also consider the type of coverage — if your policy pays to replace your equipment with new, make sure you value it at today’s prices, which may be higher than what you originally paid.
4. Don’t think it can’t happen. Some dealers convince themselves that their risk is reduced because their equipment is never all in the same place at the same time — either because it’s spread out over multiple locations or because some is out for rent or out in the yard while the remainder is in the store. But how could you know exactly how to distribute the value at risk? And what will you do if you make the wrong assumption?
Remember, there’s no guesswork when you insure to value using an accurate and comprehensive inventory of your business. Insurance is a smart investment — and it’s worth every penny to make it right.
Risk Management June/July 2005
Friday, July 10, 2009
Saving pennies, risking dollars
Not able to cover all of your losses? Why risk that when you don’t have to?
BY GRETCHEN LEE
You buy the insurance but you just never think you’ll actually have to make a claim on a catastrophic event. But last winter, the unthinkable happened at South Metro Rental in Lakeville, Minn.
On Dec. 15, 2004, a fire swept through the store, ignited by a bulldozer in the back of the shop. For more than two months afterward, Manager Dale Green and his staff of four full-time employees sifted slowly and methodically through the charred remains of the store, looking for salvageable items and painstakingly creating an inventory of things that had been damaged beyond repair.
Actually, it could have been worse. South Metro Rental had reviewed its insurance coverage just two months before the fire.
The company sent applications to multiple insurance companies, one of which quoted a price based on only about half the value of South Metro’s rental inventory, under the theory that there would never be a case in which all of the equipment would be damaged at once.
ARA Insurance Services, however, insisted on quoting a price based on the full replacement value of all the equipment. South Metro evaluated the risk based on an itemized inventory of the equipment and opted to insure it to full replacement value with ARA Insurance. Fortunately, because the company followed ARA Insurance’s advice, South Metro was adequately insured and received replacement cost in order to rebuild the company’s inventory. That saved thousands of dollars.
Although few rental store owners would choose to put themselves in the position of not being able to cover their losses should they be affected by a disaster like a fire, hurricane or tornado, too many companies end up undervaluing their equipment.
Some do it because they don’t actually know the total value of their inventory — they don’t have access to an accurate and comprehensive inventory.
Some do it because they forget to include the value of items such as parts kept in the shop where they service equipment, or tools that belong to their employees.
Others do it because they don’t really believe that their entire inventory actually needs to be insured. After all, they reason, at any given time there will be some equipment out on rent, some in the yard and — if the company has more than one store — some housed at other locations.
But the worst can — and does — happen. A tornado could damage tools in the yard, tear the roof off the store and overturn equipment at a jobsite. A terrible fire could break out in the store where three of the company’s most expensive items, a set of tractors usually housed one to a location, have all been moved in anticipation of a big rental the next day. When you insure to value, you’re insuring all of your inventory so that you can fully recover in the event of a catastrophe.
Contrary to popular thinking, it’s just not that costly to insure to value. Additional coverage over the basic amount is only incrementally expensive. As the value goes up, the increments go down. That means the first $100,000 in coverage may cost a certain amount, but the next $100,000 will cost less, and the $100,000 after that will cost even less.
We know that rental store owners are a cost-conscious lot, and almost all rental managers and owners know full well the importance of not overspending.
But when it comes to insurance, you’d be penny wise and pound foolish to not insure to value. If you really can’t replace your inventory for the amount quoted, how are you going to run your business?
Risk Management May 2005
BY GRETCHEN LEE
You buy the insurance but you just never think you’ll actually have to make a claim on a catastrophic event. But last winter, the unthinkable happened at South Metro Rental in Lakeville, Minn.
On Dec. 15, 2004, a fire swept through the store, ignited by a bulldozer in the back of the shop. For more than two months afterward, Manager Dale Green and his staff of four full-time employees sifted slowly and methodically through the charred remains of the store, looking for salvageable items and painstakingly creating an inventory of things that had been damaged beyond repair.
Actually, it could have been worse. South Metro Rental had reviewed its insurance coverage just two months before the fire.
The company sent applications to multiple insurance companies, one of which quoted a price based on only about half the value of South Metro’s rental inventory, under the theory that there would never be a case in which all of the equipment would be damaged at once.
ARA Insurance Services, however, insisted on quoting a price based on the full replacement value of all the equipment. South Metro evaluated the risk based on an itemized inventory of the equipment and opted to insure it to full replacement value with ARA Insurance. Fortunately, because the company followed ARA Insurance’s advice, South Metro was adequately insured and received replacement cost in order to rebuild the company’s inventory. That saved thousands of dollars.
Although few rental store owners would choose to put themselves in the position of not being able to cover their losses should they be affected by a disaster like a fire, hurricane or tornado, too many companies end up undervaluing their equipment.
Some do it because they don’t actually know the total value of their inventory — they don’t have access to an accurate and comprehensive inventory.
Some do it because they forget to include the value of items such as parts kept in the shop where they service equipment, or tools that belong to their employees.
Others do it because they don’t really believe that their entire inventory actually needs to be insured. After all, they reason, at any given time there will be some equipment out on rent, some in the yard and — if the company has more than one store — some housed at other locations.
But the worst can — and does — happen. A tornado could damage tools in the yard, tear the roof off the store and overturn equipment at a jobsite. A terrible fire could break out in the store where three of the company’s most expensive items, a set of tractors usually housed one to a location, have all been moved in anticipation of a big rental the next day. When you insure to value, you’re insuring all of your inventory so that you can fully recover in the event of a catastrophe.
Contrary to popular thinking, it’s just not that costly to insure to value. Additional coverage over the basic amount is only incrementally expensive. As the value goes up, the increments go down. That means the first $100,000 in coverage may cost a certain amount, but the next $100,000 will cost less, and the $100,000 after that will cost even less.
We know that rental store owners are a cost-conscious lot, and almost all rental managers and owners know full well the importance of not overspending.
But when it comes to insurance, you’d be penny wise and pound foolish to not insure to value. If you really can’t replace your inventory for the amount quoted, how are you going to run your business?
Risk Management May 2005
Tuesday, June 30, 2009
National Equipment Register
June, 2009 Equipment Theft Advisory
4th of July Holiday Warning
Theft reports to NER this spring show that organized criminal elements appear to be driving theft activity nationwide. In addition to typical isolated theft incidents which increase seasonally, thefts targeting specific machines and specific areas indicate the organized criminal element is very active, and increasing their activity in light of current economic conditions. As discussed in two specific alerts on the continued threat against commercial mowers and backhoe loaders, theft prevention measures and the usual deterrents may not be enough to stop these rings.
Thefts by the Numbers:
Top Theft States May, June 2009:
Texas
Georgia
Florida
California
Alabama
Top Types of Equipment Targeted
Tractors: compact, Subcompact and Utility
Commercial Mowers
Skid Steer Loaders
Utility Vehicles/Utility Carts
Backhoe Loaders
Top Theft Locations
Dealerships
Open Job Sites
Rental Yards
Storage Areas/Equipment Yards
Agricultural Fields
IT IS NO LONGER A QUESTION OF IF A THEFT WILL OCCUR BUT WHEN IT WILL OCCUR - RECOGNIZING THEFTS IN PROGRESS MUST BE A NEW FOCUS IN ADDRESSING THE PROBLEM
Undoubtedly, the organized criminal element and small time thieves will take advantage of slowdowns before and during the 4th of July Holiday. Industry and Law Enforcement must educate personnel to recognize and be prepared to respond to thefts in progress that currently are not being detected, allowing thieves to operate with near impunity.
CALL 911! NER strongly encourages any afterhours activity at dealerships, rental and contractor yards and job sites to be reported to local police immediately, especially vehicles entering or exiting the facilities. Companies should provide employees with this alert to raise awareness and increase the number of eyes on the lookout for thefts.
Law Enforcement should be on the alert that any afterhours activity at these locations is most likely criminal in nature- dispatch and patrol personnel must be made aware of this dramatically increasing trend, and provided information on how to respond by making use of NER and NICB's resources through NICB's Law Enforcement hotline- 800-447-6282
Industry should post emergency phone numbers at jobsites, yards and dealerships. Also be sure your emergency contact information on file with NER and the local Construction Industry Crime Prevention Programs is up to date. Update your company phone message with emergency contact information that will reach someone over the holiday.
Law Enforcement should contact NICB for NER's ownership information on any equipment stopped or examined. Any thefts occurring over the holiday no doubt will not be active thefts on NCIC; only the owners can confirm a machine is NOT STOLEN.
Organized Theft Rings
Commercial Mowers and Backhoes Targeted, Organized Rental Frauds
Commercial Mowers thefts and the incredible rate of Backhoe thefts in Miami have both been subjects of NER advisories in the past. Owners are taking steps to prevent theft, but these trends continue to gain steam with no sign of letting up.
Miami Area Backhoe Thefts
NER now lists 19 backhoe loaders stolen in Florida since January, the majority of thefts occurring in the greater Miami metropolitan area. Consistently the machines are stolen from job sites, at times just after workers leave. NER recommends that NO Backhoe Loaders be left on job sites, whether open or fenced, over the 4th of July weekend. All machines should be removed to secure, monitored storage preferably in doors. See the full advisory here:
http://www.stopequipmenttheft.com/NER_Theft_Advisory_Backhoes_Miami_June_09.pdf
The Commercial Mower Theft Juggernaut
Over the years, more enterprising and motivated criminal organizations appear to be involved in the thefts of commercial ride on mowers, and the incidents in 2009 show an alarming brazenness and very little apparent fear of discovery by the offenders. Dealers across the country have heeded warnings from NER and the manufacturers to protect equipment and engage local Law Enforcement before thefts occur. These efforts, though, appear to only motivate the thieves to more complex and premeditated burglaries. Thieves are using stolen commercial vehicles, rented U-Haul vans, and victim's rigs to steal the machines, after they often spend hours at the facilities assembling the machines from crates. They arrive with tools, batteries, fuses, relays and diesel fuel- anything they may need to get the targeted machines into operation. In one incident in Florida, thieves brought a custom constructed bridge specifically fitted to allow machines to traverse a large drainage ditch at a dealership.
Stopping thefts in progress, and connecting Law Enforcement across the country investigating these crimes may be the only way to disrupt this trend, and ease the tremendous financial impact it is having on the industry. Law Enforcement and the industry must work hand in hand to share information, and raise awareness among the general public. See the full advisory at:
http://www.stopequipmenttheft.com/NER_Theft_Advisory_Commercial_Mowers_June_09.pdf
Organized Rental Fraud Rings
Rental fraud and conversion is not a new plague afflicting the rental industry. An increase in organized frauds targeting an increased volume of property and equipment, though, is making the impact of this problem critical for the struggling rental industry. Law Enforcement is encouraged to work proactively with the industry to recognize these offenses as the orchestrated criminal behavior they are. The rental industry is encouraged to work within its own community, the American Rental Association and NER to share information on trends in order to forewarn potential victims and to help Law Enforcement locate offenders. See recent NER and ARA advisories on these acts at:
California Thefts By Fraud (involving potentially armed subjects) http://www.stopequipmenttheft.com/Rental_Fraud_Alert_California_6.4.09.pdf
Texas Identity Theft Fraud http://www.stopequipmenttheft.com/NER_Texas_Rental_Fraud_Alert_6.8.09.pdf
Texas Fraud Artists Pawn Machine http://www.stopequipmenttheft.com/ARA_Fraud_Alert_5.28.2009.pdf
View this advisory as a PDF online at:
www.stopequipmenttheft.com/Hotlist.html
National Equipment Register
skaufman@nerusa.com
561.843.3753
www.stopequipmen
theft.com
4th of July Holiday Warning
Theft reports to NER this spring show that organized criminal elements appear to be driving theft activity nationwide. In addition to typical isolated theft incidents which increase seasonally, thefts targeting specific machines and specific areas indicate the organized criminal element is very active, and increasing their activity in light of current economic conditions. As discussed in two specific alerts on the continued threat against commercial mowers and backhoe loaders, theft prevention measures and the usual deterrents may not be enough to stop these rings.
Thefts by the Numbers:
Top Theft States May, June 2009:
Texas
Georgia
Florida
California
Alabama
Top Types of Equipment Targeted
Tractors: compact, Subcompact and Utility
Commercial Mowers
Skid Steer Loaders
Utility Vehicles/Utility Carts
Backhoe Loaders
Top Theft Locations
Dealerships
Open Job Sites
Rental Yards
Storage Areas/Equipment Yards
Agricultural Fields
IT IS NO LONGER A QUESTION OF IF A THEFT WILL OCCUR BUT WHEN IT WILL OCCUR - RECOGNIZING THEFTS IN PROGRESS MUST BE A NEW FOCUS IN ADDRESSING THE PROBLEM
Undoubtedly, the organized criminal element and small time thieves will take advantage of slowdowns before and during the 4th of July Holiday. Industry and Law Enforcement must educate personnel to recognize and be prepared to respond to thefts in progress that currently are not being detected, allowing thieves to operate with near impunity.
CALL 911! NER strongly encourages any afterhours activity at dealerships, rental and contractor yards and job sites to be reported to local police immediately, especially vehicles entering or exiting the facilities. Companies should provide employees with this alert to raise awareness and increase the number of eyes on the lookout for thefts.
Law Enforcement should be on the alert that any afterhours activity at these locations is most likely criminal in nature- dispatch and patrol personnel must be made aware of this dramatically increasing trend, and provided information on how to respond by making use of NER and NICB's resources through NICB's Law Enforcement hotline- 800-447-6282
Industry should post emergency phone numbers at jobsites, yards and dealerships. Also be sure your emergency contact information on file with NER and the local Construction Industry Crime Prevention Programs is up to date. Update your company phone message with emergency contact information that will reach someone over the holiday.
Law Enforcement should contact NICB for NER's ownership information on any equipment stopped or examined. Any thefts occurring over the holiday no doubt will not be active thefts on NCIC; only the owners can confirm a machine is NOT STOLEN.
Organized Theft Rings
Commercial Mowers and Backhoes Targeted, Organized Rental Frauds
Commercial Mowers thefts and the incredible rate of Backhoe thefts in Miami have both been subjects of NER advisories in the past. Owners are taking steps to prevent theft, but these trends continue to gain steam with no sign of letting up.
Miami Area Backhoe Thefts
NER now lists 19 backhoe loaders stolen in Florida since January, the majority of thefts occurring in the greater Miami metropolitan area. Consistently the machines are stolen from job sites, at times just after workers leave. NER recommends that NO Backhoe Loaders be left on job sites, whether open or fenced, over the 4th of July weekend. All machines should be removed to secure, monitored storage preferably in doors. See the full advisory here:
http://www.stopequipmenttheft.com/NER_Theft_Advisory_Backhoes_Miami_June_09.pdf
The Commercial Mower Theft Juggernaut
Over the years, more enterprising and motivated criminal organizations appear to be involved in the thefts of commercial ride on mowers, and the incidents in 2009 show an alarming brazenness and very little apparent fear of discovery by the offenders. Dealers across the country have heeded warnings from NER and the manufacturers to protect equipment and engage local Law Enforcement before thefts occur. These efforts, though, appear to only motivate the thieves to more complex and premeditated burglaries. Thieves are using stolen commercial vehicles, rented U-Haul vans, and victim's rigs to steal the machines, after they often spend hours at the facilities assembling the machines from crates. They arrive with tools, batteries, fuses, relays and diesel fuel- anything they may need to get the targeted machines into operation. In one incident in Florida, thieves brought a custom constructed bridge specifically fitted to allow machines to traverse a large drainage ditch at a dealership.
Stopping thefts in progress, and connecting Law Enforcement across the country investigating these crimes may be the only way to disrupt this trend, and ease the tremendous financial impact it is having on the industry. Law Enforcement and the industry must work hand in hand to share information, and raise awareness among the general public. See the full advisory at:
http://www.stopequipmenttheft.com/NER_Theft_Advisory_Commercial_Mowers_June_09.pdf
Organized Rental Fraud Rings
Rental fraud and conversion is not a new plague afflicting the rental industry. An increase in organized frauds targeting an increased volume of property and equipment, though, is making the impact of this problem critical for the struggling rental industry. Law Enforcement is encouraged to work proactively with the industry to recognize these offenses as the orchestrated criminal behavior they are. The rental industry is encouraged to work within its own community, the American Rental Association and NER to share information on trends in order to forewarn potential victims and to help Law Enforcement locate offenders. See recent NER and ARA advisories on these acts at:
California Thefts By Fraud (involving potentially armed subjects) http://www.stopequipmenttheft.com/Rental_Fraud_Alert_California_6.4.09.pdf
Texas Identity Theft Fraud http://www.stopequipmenttheft.com/NER_Texas_Rental_Fraud_Alert_6.8.09.pdf
Texas Fraud Artists Pawn Machine http://www.stopequipmenttheft.com/ARA_Fraud_Alert_5.28.2009.pdf
View this advisory as a PDF online at:
www.stopequipmenttheft.com/Hotlist.html
National Equipment Register
skaufman@nerusa.com
561.843.3753
www.stopequipmen
theft.com
Friday, May 8, 2009
Heavy Equipment Theft Summit
Heavy Equipment Theft Summit
Hosted by:
Massachusetts State Police
Governors Auto Theft Strike Force
June 3, 2009
Stonehill College
320 Washington St., Easton, MA 02356
Sponsors:
ARAM NEWS
The Massachusetts State Police, American Rental Association, ARA of Massachusetts, FBI-LEEDA, National Insurance Crime Bureau (NICB)and National Equipment Register (NER) invite you to participate in this one-day regional summit designed for:Law Enforcement Equipment Owners, Dealers or Rental, and Auction Yards
Insurance Adjusters or Agents General Session - examines the equipment theft problem, recovery challenges and solutions. By exploring the growing problem of construction and agricultural equipment theft, the challenges that hinder equipment recovery and the latest equipment security technologies, attendees will be better prepared to join the fight against equipment theft.
Break-out Classes - provide law enforcement with instruction in equipment identification training, while equipment owners and insurers explore theft prevention strategies and how to increase the chances of recovering stolen equipment.
Catered Lunch - gives equipment owners and law enforcement an opportunity to discuss
issues of common interest and ways to support each other’s efforts.
Registration is FREE for law enforcement,equipment owners and NICB or NER member insurers.
(866) 663-7872
info@NERusa.com
Hosted by:
Massachusetts State Police
Governors Auto Theft Strike Force
June 3, 2009
Stonehill College
320 Washington St., Easton, MA 02356
Sponsors:
ARAM NEWS
The Massachusetts State Police, American Rental Association, ARA of Massachusetts, FBI-LEEDA, National Insurance Crime Bureau (NICB)and National Equipment Register (NER) invite you to participate in this one-day regional summit designed for:Law Enforcement Equipment Owners, Dealers or Rental, and Auction Yards
Insurance Adjusters or Agents General Session - examines the equipment theft problem, recovery challenges and solutions. By exploring the growing problem of construction and agricultural equipment theft, the challenges that hinder equipment recovery and the latest equipment security technologies, attendees will be better prepared to join the fight against equipment theft.
Break-out Classes - provide law enforcement with instruction in equipment identification training, while equipment owners and insurers explore theft prevention strategies and how to increase the chances of recovering stolen equipment.
Catered Lunch - gives equipment owners and law enforcement an opportunity to discuss
issues of common interest and ways to support each other’s efforts.
Registration is FREE for law enforcement,equipment owners and NICB or NER member insurers.
(866) 663-7872
info@NERusa.com
Tuesday, April 21, 2009
Commercial Dealer
Check out my latest article in Commercial Dealer:
http://www.commercialdealer.com/news/news.asp?ID=1918
http://www.commercialdealer.com/news/news.asp?ID=1918
Friday, April 3, 2009
Inland Marine:
Inland Marine:
Is your Rental Equipment covered?
This coverage should protect your rental equipment against direct physical loss or damage including conversion and theft. Flood and earthquake coverage should be included.
Your policy should also include, but not be limited to, rental equipment such as portable equipment, self-powered
equipment, equipment trailers 10,000lbs and under, tools and equipment that you have re-rented from other equipment dealers or for which you are financially responsible.
The equipment and property described above should be covered on premises, off premises and while being transported.
Please make sure you are covered!
Is your Rental Equipment covered?
This coverage should protect your rental equipment against direct physical loss or damage including conversion and theft. Flood and earthquake coverage should be included.
Your policy should also include, but not be limited to, rental equipment such as portable equipment, self-powered
equipment, equipment trailers 10,000lbs and under, tools and equipment that you have re-rented from other equipment dealers or for which you are financially responsible.
The equipment and property described above should be covered on premises, off premises and while being transported.
Please make sure you are covered!
Tuesday, March 10, 2009
Featured in Commercial Dealer
Follow this link: http://www.commercialdealer.com/news/news.asp?ID=1866
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