Think the most common equipment loss is collision, fire or vandalism? Think again.
According to an annual report from the National Equipment Register (NER), equipment losses due to theft could be as high as $1 billion with less than 25% of those losses recovered. Until 2015, theft has been the most frequent loss reported by equipment owners since NER began reporting on these losses.
Construction equipment theft is the most common equipment loss because it is driven by a number of factors. Risk seems low because of soft sentencing for thieves if they are caught, resale value of stolen items is relatively high, and construction sites are often not monitored very closely, just to name a few.
Theft doesn’t only increase costs for equipment dealers, it reduces profitability for equipment renters as well due to down time and loss of productivity. Protecting equipment from theft is crucial to efficiency and profitability of any construction business. By implementing a few security measures, equipment owners and renters can make sure their money isn’t wasted.
Training employees against on-site criminal activity can reduce risk due to theft, and can often be included in a weekly team meeting or in morning rallies. Thorough training that includes simple safeguards like locking up equipment and entering it into an equipment log are first lines of defense against theft.
Equipment dealers can ask their renters about security measures at the job site, whether the equipment is fenced in or gated when not in use, and clearly labeling each piece of construction equipment, including pieces that can be removed and resold. (Yes, that literally means writing your name on it. Or, more effectively, engraving or stamping an identifier on the piece of equipment.) Keeping good records of equipment, including when it was purchased, photos, PIN or serial numbers, and make and model will help to identify stolen equipment as well.
For construction companies, background checks for operators, thorough inspection and familiarity with a job site, and retrieving equipment as soon as possible after a job is completed are a few low- to no-cost best practices that can reduce equipment theft.
Many newer pieces of heavy equipment are fitted with telematics systems that make it possible to remotely monitor equipment location and other use data. Adding multiple layers of security measures, like security personnel and video monitoring can reduce theft even further.
Warren CAT offers three practical ways to improve security at a job site:
Before the site shuts down each evening, have all the vehicles parked facing into a circle, with smaller pieces of equipment placed in the middle.
Have surveillance cameras and/or motion detectors installed at the location.
See if you can get local law enforcement to patrol the area with greater frequency during off hours, especially if your site is in a high-theft area.
Identifying and reporting problems is the first step in solving them. Report theft and fraud immediately to the local authorities and cooperate with police efforts to recover stolen equipment. Background checks help here as well to identify past offenders or fraudulent applications. The sooner equipment is reported as stolen, the better chances are for recovering it.
Losses happen. That’s what insurance is for. Make sure your business is covered by a reputable company with construction industry expertise. For rental fleets, explore your coverage options, like collecting a certificate of insurance, providing a loss damage waiver (LDW) or even self-insuring.
When collecting a certificate of insurance, make sure your dealership is listed on the certificate and that the coverage amount will provide adequate protection in case of a total loss like theft. Set up a system or protocol to review certificates for validity and accuracy and to ensure that any expiring certificates are renewed. An expired or invalid certificate will not protect your equipment.
If your dealership has a loss damage waiver in place, make sure it covers losses due to theft with replacement cost instead of actual cash value. Replacement cost will pay to replace the equipment. Actual cash value pays out the market price, or replacement cost minus depreciation of the equipment.
If you have questions, it’s also a good idea to speak to an insurance advisor or consultant. You can also email us; we’re here to help.
Ready to learn more? Check out 5 Things Every Equipment Dealer Needs to Know About Damage Waivers