Industry Insurance

What you need to know about offering mobile plant and equipment for hire

mobile plant

NTI has reported a transport, urban and civil infrastructure boom in Australia, with considerable activity in the mining and general construction sectors. With this massive pipeline of projects, businesses are making the most of their opportunities. But there’s a snag: mobile plant and equipment (MPE) is in short supply.

This environment of MPE shortages and increased demand is music to the plant hire industry’s ears. At the same time, companies with surplus MPE can generate revenue from assets that would otherwise be sitting idle.

Therefore, it’s essential to understand hire arrangements and insurance. If you get them wrong you may end up with a customer conflict, or worse, an uninsured financial loss. Obtaining the right expertise is essential.

Here we explore the key considerations when hiring out your MPE.

Obtain quality legal advice

Hire agreements are central to any hire business and a critical risk management tool. Engage a lawyer experienced in preparing hire agreements for the mobile plant industry to draft an agreement tailored to you.

The one-off (and tax deductible) expense is negligible compared to the risk exposure from a contract that’s poorly worded or doesn’t cover the relevant risks and conditions.

“This is critical,” NTI’s National Strategic Underwriter – MPE Gary Woodhams said. “Don’t take shortcuts – if you don’t obtain good legal advice, you’re guaranteed very poor results when things go wrong.”

Crafting a good quality hire agreement will provide years of contract certainty and clarity of obligations for all parties.

Conversely, a poorly crafted hire agreement – or one without legal input – invites complications. You’ll most likely experience problems obtaining adequate insurance, conflicts around who is responsible for damage and insurance, accusations of unfair contract terms and delayed or declined insurance claims.

Understanding business objectives and hire people

Before drafting a hire agreement, your lawyer will need to understand some critical facts about your business to establish the hire profile and needs, including:

  • Will you be offering wet or dry hire – or both?
  • What’s your target market?
  • Which items will you offer?
  • What hire periods will you offer?
  • Who holds risk in the equipment, how will it work, is it clear and fair?

Crafting the hire agreement

Preparing your hire schedule with transparent terms and conditions is a critical step you must work through with your lawyer.

“There is so much to consider, and you need that legal expertise to craft a hire agreement that will serve you and your customers well into the future,” Woodhams said. “Critically, you want to deliver positive customer experiences. They’ll protect your reputation and boost your brand, leading to repeat business, referrals and a steady revenue stream.”

The goal is clarity of obligations to protect both owner and hirer.

Damage waivers

Damage waivers are not insurance policies; they are conditions or clauses in a hire agreement that limit the hirer’s liability or responsibility for certain types of damage to the equipment. Damage outside the damage waiver’s scope remains the hirer’s responsibility.

If poorly constructed, damage waivers have the potential for disputes and other difficulties. Communication and clarity on what the

damage waiver does and does not cover is critical so the hirer can identify and make suitable arrangements to deal with any gaps, including opting out of the damage waiver and insuring themselves if they prefer.

Alternatively, you can comprehensively insure the equipment yourself while in the hirer’s possession and use. You can attach conditions, such as hirer responsible for an elevated (i.e. not extreme) level of excess to force their skin in the game, and other appropriate and reasonable terms to ensure accountability.

Speak to your insurance broker

Your hire agreement must clearly describe what insurance you’re providing and the risks the hirer must manage or cover. Woodhams’ recommendation is to work with your broker.

“Brokers are experts and your appointed risk advisors,” he said. “Be directed by their advice. The insurance side needs careful professional attention. If you are providing a damage waiver or full insurance, that is increased risk.

“Your broker’s input on how insurance arrangements comply with hire agreement requirements is invaluable. Your goal is to avoid uninsured losses for you or your customer. You want to be sure your hirers understand their liabilities and have a positive experience.”

It is essential to understand that your insurer is legally entitled to follow and deal with any insurance claims per the hire agreement terms, conditions, exclusions and limitations, including making recoveries (i.e. suing) directly off the hirer (i.e. your customer).

Hiring out your MPE can be a great way to generate revenue from all your assets. If you’re thinking of hiring out some of your MPE, it’s so important to obtain the right advice and insurance. Speak to your lawyer and insurance broker.

If you’d like to learn more about risk management and how to protect your business, contact your insurance broker or NTI today. Visit NTI’s Yellow Cover at

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