A look into the most severe and frequent insurance claims
By Ashleigh Petersen
January 18, 2023
Owning a business comes with many challenges including some outside factors that can impact your company and your insurance rates. Being prepared and having proper coverage can help when disaster strikes.
To help those in the equipment and event rental industry, Jamie Cox, claims/risk manager at ARA Insurance, Overland Park, Kan., gives an inside look at the most frequent types of insurance claims in 2022 and the types of claims that are the most severe, leading to larger payouts. In the interview below, she also offers advice on how to reduce your company’s risk of needing to file a claim.
Rental Management: What types of claims did ARA Insurance see the most of in 2022? How did that compare to past years?
Jamie Cox: Auto related claims continue to be the most frequent type of incident that we see reported to ARA Insurance. While we did see a slight dip in the number of auto related claims during 2020 due to the pandemic — that quickly rebounded. As with everything in life these days, we are more distracted in general, when this is partnered with operating a motor vehicle it increases the chances of being involved in an accident.
Another area that we have seen increased frequency in would be around equipment theft. While this is more prevalent in the construction/general tool sector of the industry — it is definitely something that has a huge impact.
Rental Management: What advice would ARA Insurance give to American Rental Association (ARA) members to help them avoid the most common types of claims?
Cox: My advice is to take advantage of the resources available to you on RentalU. From the Professional Driver Education Program (PDEP) to the new Box Truck Training, there is an abundance of information out there to help protect yourself out on the road.
When it comes to equipment theft, I have seen some great conversations around this on the Rental Industry Facebook groups. Your peers are an amazing resource and relying on each other and the rental community as a whole is the best resource there is at times.
Rental Management: What types of claims are most severe, leading to larger payouts and impacting the insurance industry?
Cox: Looking back on the last 12 months, Auto Collision and Auto Liability Property Damage (damages caused to a third party) are the most “severe” when categorizing claims. With more sophisticated automobiles on the road and increased safety features being installed the price to repair a car is much more than it once was. In addition, pandemic-related shortages are causing delays in repairs, increasing shipping times, and costs as a whole. We see this not only with automobiles, but equipment as well.
On an individual claim basis, the most severe claim category on its own is fire-related losses. Claims involving fires destroying rental inventory and the building premises cause the most damage and are the most severe when it comes to an individual.
Rental Management: What impact do weather events and natural disasters have on the insurance market?
Cox: Increases in natural disasters have been shown in recent years. With that being said I am glad that the 2022 hurricane season produced less storms than initially projected. When these natural disasters occur in greater frequency, causing more losses, this has an impact on insurance rates (particularly Property) across the industry. While ARA Insurance has seen some impact from these disasters, we have been able to maintain more stable rates than seen in other places in the market. John Kennedy, ARA Insurance president, recently touched on this in Rental Management’s ARA Sourcebook and 2023 Buying Guide. Kennedy said, “The ARA Insurance Program is structured with reinsurance for natural disaster losses so that has helped minimize large rate swings.”
Rental Management: Are the effects of the coronavirus (COVID-19) pandemic still having any impact on the insurance industry?
Cox: The COVID-19 pandemic is still having an impact on the insurance industry, but not in the same way as you would initially think. While we are not seeing claims come in from the pandemic, the shutdowns and supply chain issues that it created have become a big issue. When it comes to the rental industry specifically, we are seeing issues getting replacement equipment, delays in parts and shipping which cause increased repair times on not only equipment but automobiles, and delays finding qualified contractors to do repairs.
Rental Management: Are there any emerging risks those in the equipment and event rental industry should be aware of?
Cox: Cybersecurity is a hot item. Not necessarily ransomware attacks, but payment fraud. Cyber criminals have become more sophisticated and have sharpened their skills. I am seeing an influx in members being taken advantage of through receiving fraudulent payment instructions for ACH and online payments. Stay vigilant. If something doesn’t make sense, then question it. If you are being asked to send a large payment via ACH, pick up the phone and call your contact at the company and verify the payment information over the phone.
ARA Insurance can help protect your business
For more than 40 years, ARA Insurance has worked with those in the equipment and event rental industry to develop rental-specific coverages and improve industry safety by investing in risk management initiatives. ARA Insurance is the leading insurer of American Rental Association (ARA) members.
Types of coverage offered by ARA Insurance include:
- Auto — This insurance is available for service vehicles and rental trucks as well as trailers. Trailers can be insured along with vehicles and may not need to be scheduled. Coverage requirements vary by state. Contact an agent for additional details.
- Cyber Suite™ — Cyber Suite insurance covers expenses associated with restoring data and computer systems and protects against third-party liability from an unauthorized intrusion of a computer system.
- Employment Practices Liability Insurance (EPLI) — This insurance will defend you and pay damages for which you are legally liable due to claims made by employees alleging discrimination, wrongful termination, harassment and other employment-related issues. EPLI is offered in most states.
- General and excess liability — This insurance pays for injury or damage to others resulting from your business operations. It also pays to investigate accidents and defend a rental business when it is not liable. Excess liability provides limits above a business’ primary liability limits. ARA Insurance includes a blanket additional insured by written contract endorsement. This means you do not pay a fee for a Certificate of Insurance showing an additional insured.
- Inland marine — ARA Insurance offers a specialized coverage form for your rental or sales inventory with replacement cost and conversion included.
- Property — ARA Insurance offers property/building coverage with replacement cost and no coinsurance, which means you are not required to carry insurance equal to a specified percentage of the property value to receive full payment on a loss. ARA Insurance applies only one deductible for a claim that involves damage to buildings as well as equipment/inventory.
- Workers’ compensation — This coverage provides wage replacement and medical benefits to employees injured on the job.
- Data compromise — This insurance covers expenses arising from a personal data breach.
To learn more, visit ARAinsure.com.