March 2, 2021
Are You Running Naked with Your Bare Rental?
Or, How to Make Sure Your Crane is Covered
Bare is Big
More and more crane companies are going bare right now. Pandemic and economic issues in construction and oil and gas have left many cranes underutilized, so savvy companies are bare renting equipment rather than letting it sit in their yard unused. Even the big players are upping their bare rental game:
- Mammoet has begun bare renting cranes in the MidAtlantic region “Although crane rental isn’t new to Mammoet, offering these machines in a purely “bare” rental mindset specifically in the US market is,” Mammoet’s business development director of commercial rentals Randall Fox told American Cranes and Transport.
- Many crane rental companies are transitioning their business model from service provider to supplier, using their own operator, to a rental of heavy lift equipment through bare rentals.
- This equates to renting the equipment without supplying an operator.
Maeda USA’s Tony Inman told American Cranes and Transport that he thinks increased business in 2021 will make up for a slow 2020, partly due to the continuing growth in bare rental of cranes versus owned and operated cranes.
Watch Your Coverage
Though bare rentals can provide your company with a nice source of income, it’s important to make sure you’re not caught with your pants down when it comes to insurance. Too many times the lessee’s insurance isn’t properly written for crane coverage. It’s not malicious on their part; it’s just that their insurance broker isn’t in the business of insuring cranes and may not know a jib from a boom. And the average crane company lessee often doesn’t think to look or ask for specific crane coverage.
But that omission can cost millions. Think about it: OSHA identifies the major causes of crane accidents as:
- boom or crane contact with energized power lines (nearly 45% of the cases)
- under the hook lifting device
- overturned cranes
- dropped loads
- boom collapse
- crushing by the counter weight
- outrigger use
- rigging failures
How many of those crane-specific factors do you think are covered by basic bare rental agreements?
At CoVerica, we specialize in crane insurance, and we’ve seen too many bare rental agreements that leave our clients uncovered. In fact, the issue is big enough that it prompted one of our specialists to put together a checklist for our clients. The Amanda Roberson Checklist, as we like to call it, tells clients what to look for before signing a bare rental agreement. It’s based on best practices, previous claims, and Amanda’s 21 years in the industry—and it protects crane owners by affording them a high-level view of their bare rental insurance needs.
Bare Rental Insurance Big Three
Though the Amanda Roberson Checklist covers a multitude of bare rental agreement sins, three problem areas stand out:
What’s a crane without a boom? Yet many bare rental agreements skip any mention of coverage for boom damage. Boom accidents can cost hundreds of thousands of dollars and are caused by a myriad of factors, such as:
- Bad weather. Strong winds and heavy rainfall have been blamed for several crane accidents, including the deadly 2015 accident in Mecca, Saudi Arabia.
- Equipment failure. A new 5500-ton Liebherr crane collapsed this past May when a crane hook broke, flipping the booms backward. Liebherr said that the hook was purchase from an external supplier and it was unclear why it did not withstand the load.
- Human error. Overloading and improper loading probably cause the most accidents, but operators can make other mistakes, as when the lattice boom of a truck crane ran into a stationary crawler crane boom on the site of LA’s new SoFi Stadium this past February, causing the crawler’s boom to crash to the ground.
And though you can’t control weather, faulty equipment, or operator behavior, you can make sure you’re covered for boom damage. Amanda suggests your bare rental agreement indicates that the boom is included with evidence of policy wording. It’s also a good idea to make sure that not just the lessor but also the lessee inspect the boom for any issues.
According to OSHA, overloading causes four out of every five crane upsets and/or structural failures—and those accidents can be directly traced to human error. Hoisting operators may not have the experience or skill required. They could be using the rated capacity as a guideline. They could be tired and ready to go home and simply don’t use the proper amount of counterweights.
Or the accident could be someone else’s fault, as was the case last May in Madrid, Spain, where a Liebherr crane from the Aguilar rental fleet was on a demolition job. The seven-axle All Terrain crane was supporting an element while it was cut free—an element that was supposed to weigh half of what it did. The crane tumbled over, luckily causing only material damage. ”The cause of the accident was a miscalculated cut,” the company said on social media. “In this case the piece weighed almost twice as much as we were told, which led to the destabilization and overturning of the crane.”
A bare rental agreement increases your risk for human error—you don’t get the chance to vet the operators or double-check calculations. That’s why the Amanda Roberson checklist suggests you ascertain that overload is included with evidence of policy wording, and that you ask renters to list equipment item with value and applicable deductible. The description should include max weight with max load, and remember to check the policy carefully to make sure there’s no “boom overload” or “weight of load” exclusions.
Already a big issue for crane safety, land subsidence is getting worse. Ground conditions are so important, it’s creeping up as one of the major causes of crane upsets. Soft ground conditions may be the primary cause of cribbing or outriggers sinking into the soft soil. Though the settling and shifting of earth is a natural phenomenon, the incidence of subsidence is increased by a number of factors. Ground water extraction has caused severe subsidence issues in urban areas, and petroleum extraction is a big problem as well.
And subsidence can happen anywhere, anytime. In November, a 100-tonne Link-Belt TCC1100 from the ALL crane rental fleet was working on Toronto, Ontario’s rail system when the ground opened up—right underneath the crane. Though the sinkhole nearly swallowed the crane, the operator was able to crawl out without injury. There was no warning: The same crane had been onsite for eight months without any previous issues.
Many “equipment physical damage” and “general liability” insurance policies EXCLUDE any loss caused by ground movements, subsidence, and sinkholes. This could be problematic if a $3,000,000 machine is sitting on its side and waiting for the insurance adjuster to deliver the bad news.
Getting swallowed by the earth is scary enough without having to wonder if you’re insured. That’s why Amanda recommends you make sure any lessee’s policy contains evidence that subsidence is not excluded, and to avoid any confusion with your customer, we strongly recommend placing the weight of the crane in your proposal.
Unfortunately, those are just three of the most common issues we’ve seen in bare rental cases. Other omissions range from the easy-to-overlook, like a lack of cargo insurance, to the glaringly obvious, like the policy that excluded “all resulting loss of income and consequential loss” from any accident. Luckily, all of the exclusions are obvious to us, because we know the crane industry. If you’d like to talk to an insurance expert who really understands bare rentals, give us a call. We’d love to keep you covered.