For businesses across Hawke’s Bay, the recent sharp rise in diesel prices is more than just a headline — it’s a direct hit to your operating margins and project planning.
As you reassess your operations to navigate this volatile energy market, an area that can yield potential relief is your insurance programme. Specifically, ‘laying up’ fleet that isn’t being utilised — and therefore having your insurance costs reflect that.
Understanding the ‘laid-up’ option
If you have machinery that will be sitting idle for an extended period — often defined as a minimum of 30 days — you may be eligible for a ‘laid-up’ provision within your specialist mobile plant insurance policy.
When a machine is formally declared ‘laid up’, insurers may offer a pro-rata premium credit or a reduced insurance rate. The cover does have strict criteria, however, for your insurance still to be valid. For example, the machine must be stored securely, and it cannot be used until you have formally notified your insurer and returned it to full cover.
The risks of mismanagement
Attempting to reduce premiums without proper processes can lead to significant, costly gaps in your protection. Common pitfalls include:
- Unintended gaps in cover. Accidentally using a machine while it is still listed as ‘laid up’ means you will have no insurance coverage for that equipment.
- Security non-compliance. If your machinery is parked up but does not meet the specific security conditions required by your policy, you may find your cover is voided in the event of theft or damage.
- Notification lapses. Simply parking machinery without formally declaring it to your broker or insurer may mean you miss out on premium efficiencies entirely.
How to review your fleet strategy
Given the current economic environment, it is worth taking a proactive look at your fleet. Ask yourself:
- Which machines are genuinely idle? Are there units that are only needed for standby or are marginal to your current projects?
- How long will they be parked up? Is the duration likely to exceed the minimum threshold for laid-up status?
- Do the savings outweigh the constraints? Compare the potential premium relief against the operational flexibility you sacrifice by having a machine ‘laid up’.
Rising fuel prices are a commercial reality, but your insurance programme should be as agile as your business needs to be — so make sure it is working for you.
Phil has over 35 years’ experience in the insurance industry. Having worked in a number of locations around New Zealand, Phil has amassed experience across a wide range of local, regional and national occupations, risks, exposures and risk management solutions. Phil now leads the Hawke’s Bay team and enjoys building strong relationships through service and advocacy.
