Insuring Permanently Attached Equipment

Written by Eric Petersen, CIC

It’s no secret, the vehicles that tree services are utilizing today are becoming more specialized and more important to the overall success of the company. Almost every vehicle that a tree service operates has some form of permanently attached equipment now. Whether that is the traditional forestry unit or a knuckleboom crane, the value of that truck with the attached equipment is obviously much different than what it was when the cab and chassis was rolled off the assembly line. Because of this, you should know what options you have on how that truck can be insured.   

To begin with, your standard Business Auto insurance policy is designed to pay Actual Cash Value (ACV) for Comprehensive and Collision coverage on your insured vehicles. This means the insurance company will calculate what the current value of the vehicle is at the time of the loss. They will look at comparable vehicles with similar equipment, take into consideration mileage and general wear and tear to determine the amount they will pay for the claim. 

That might be a fine way to insure the majority of your fleet, however, for a very unique or important truck, you may want to consider using your Inland Marine policy to insure some or all of the truck on Replacement Cost (RC). 

There is a new trend in the insurance industry where insurance companies are allowing tree services to separate out the coverage on a truck with permanently attached equipment between your Inland Marine policy and your Business Auto policy. Each insurance company will have different rules on this, but the most common approach is that the insurance company will insure the cab and chassis on the Business Auto policy for ACV and let you place the permanently attached equipment on the Inland Marine policy with a RC limit. 

With Replacement Cost, you will get the amount needed to replace the permanently attached equipment with a brand new attachment of like kind and quality, subject to the limit of insurance or Catastrophe limit of your Inland Marine policy. When thinking about the value of a knuckleboom crane attachment this can be a huge difference on your claim payout versus only getting Actual Cash Value. 

Other things to consider with splitting out coverage between the Business Auto and Inland Marine policies are the fact that you will have two claims and two deductibles for that one truck. You also may have two different claims adjusters to work with. Depending on the insurance company, many times you can only get RC on items that are five model years and newer, which can limit the number of items in your fleet that will qualify. Lastly, because the RC will be a higher value, insuring the permanently attached equipment on the Inland Marine policy for RC, the premium cost will likely be quite a bit higher. 

And while we are discussing very unique and important vehicles for your business, I’d like to remind you that you can purchase Business Income for those vehicles as well. We wrote a separate article on that topic that you can find here.

Because of the nuances and options of insuring vehicles within your fleet, it is important to work with your insurance agent to understand how your insurance company will handle the situation. While, it definitely takes more detailed effort and attention, to properly breakout the permanently attached equipment onto your Inland Marine policy, it has the benefit to truly help your company survive a bad accident with your prized vehicle.