Running a crane rental business is a lucrative opportunity in the current global market. Although the construction business was badly affected by the 2009 financial crisis, the once vibrant industry is back on it knees and doing extremely well. Cranes play a critical role in the construction industry as they are involved in over a third of all the activities that take place. Due to their high cost, most contractors in charge of building projects have opted to hire cranes as opposed to buying. Considering that cranes operate in a hazardous and dynamic work environment, any rental company venturing into this business must have insurance coverage. You need to understand the different valuations used by the insurer, so that you can get the right coverage for your crane. Below is a guideline that will assist you in making the right choice.
Actual Cash Value (ACV)
ACV is one of the most common types of valuation offered by insurers. It means that they will pay the actual value of replacing or repairing the crane whenever something happens to it during construction. However, the insurer will deduct the obsolescence and depreciation value before paying ACV. It is usually difficult to assess the ACV for partial losses, so most insurers will clearly state what to expect if this occurs. In most cases, they will repay you an amount that will not exceed the cost of repairing or replacing the damaged parts using the exact same materials at the time the loss occurs.
Under this option, the insurance company pays the exact amount of replacing or repairing the part of the crane that is damaged without making any deductions pertaining to depreciation. This replacement cost will be equivalent to the amount of replacing or repairing the damaged crane part using the same exact material that was present when it was insured. It is important to understand that the insurance will not pay for this valuation unless the damaged part of the crane is replaced or repaired.
For this kind of valuation, you will meet with the insurer and agree on the designated value of the crane. This amount is reached upon after conducting an appraisal on the condition of the crane or fleet that you want to insure. In case of any damage or loss, the insurance company will pay you this agreed amount to facilitate repairs or replacement.
Insurance is a core component of your crane rental business, making it important to understand what type of valuation best fits your needs. Most of all, you must realize that you will pay different premiums for each one of the valuation options discussed above.
For crane service, contact a company such as A C Jones Trucking Inc.