Physical Damage Insurance For Construction Equipment | The Basics
Like all insurance, physical damage insurance (also called PDI) is designed to protect construction equipment from the unexpected. Construction equipment is not only very expensive, it is fundamental to job progress. So while everyday dings and scrapes are inevitable, a machine that is so damaged it cannot work can be devastating.
Your customers — contractors, municipalities and others who depend on these machines — cannot afford to be without physical damage insurance. As a construction equipment dealer, you can help them obtain top-quality coverage, quickly. That not only ensures they are adequately protected right from the start, it gives customers one more reason to view your dealership as a comprehensive working partner. That builds loyalty.
PDI covers direct physical loss or damage.
It covers the cost of repairs, or if a machine is a total loss, it helps your customer pay for a replacement. Physical damage insurance applies to equipment owned outright, and it is required to finance a new piece of equipment, whether your customer is purchasing or leasing it. It also covers equipment your customer borrows or rents. However, it usually does not cover equipment they might loan or rent to someone else.
Typically, physical damage insurance covers losses caused by:
Ingestion of foreign objects
Fire or explosion
Natural occurrences such earthquakes, floods, tornadoes, wind or hail.
PDI is essential because regular business property insurance doesn’t cover machinery that moves from place to place – the heavy-duty tools of the construction trade such as bulldozers, loaders, backhoes, excavators, etc.
In addition to standard coverage, physical damage insurance may include:
Rental reimbursement coverage – the cost of renting a replacement until the damaged machine is repaired or your customer is able to acquire a new one.
Income reimbursement – the money not earned because equipment loss makes it impossible to complete a job in progress.
Blanket coverage – a single policy that covers all listed equipment, instead of obtaining PDI for each individual machine.
The amount of coverage your customer needs depends on the “actual cash value” of each piece of equipment. That’s the replacement cost minus however much the machine has depreciated. But premium cost also depends on other factors, so your customer might want to consider:
Full replacement value coverage. If a particular type of equipment will be difficult to replace (at least in a timely manner) but it is particularly important to the customer’s livelihood, this option could be worth the higher premium.
Higher deductible, to reduce the premium cost.
“Agreed value” coverage. PDI policies may include a coinsurance clause that penalizes the customer if coverage is less than the machine’s value at the time it’s damaged. “Agreed value” is a predetermined coverage cap that eliminates the need for a coinsurance clause.
Give your customers superior coverage, right away.
With help from ADI Agency, your dealership can solve customer PDI needs immediately.
You can get deals done faster, because there’s no hold-up to obtain financing while your customer waits for insurance documentation. That sets your dealership apart from the competition as a convenient one-stop resource.
ADI’s physical damage insurance program applies to all OEMs, all equipment (including trucks), all applicants and any geographic location. Your customer receives state-of-the-art coverage from an A+ AM Best rated insurer. There’s no need for gap insurance, because policies pay market value or the loan payoff amount, whichever is higher. Pricing is competitive, and you can save time and money internally, too. If you wish, you can choose to have claims reported directly to you.
Physical damage insurance is not the same as an extended warranty.
Your customers need both types of coverage, because PDI policies do not cover mechanical or electrical failure. ADI also offers exceptional extended warranty programs designed specifically for construction equipment and heavy-duty truck dealerships.