Combating The Contractors Equipment TheftEpidemic

Hiding work trailers, tractors, graders, skid steer loaders,bulldozers and other types of construction equipment is like tryingto hide a six-ton elephant. Yet plenty of thieves are up for thechallenge, including a man who reportedly stashed away $1 millionin stolen equipment until the Georgia police were tipped off anddiscovered the items hidden adjacent to a house he wasbuilding.

Theft of contractors equipment is a national epidemic. Localpolice blotters are filled with reports of equipment theft. Its ascenario that plays itself out hundreds of time per year acrossAmerica's construction sites. The construction site foreman leavesbulldozers, graders, generators and other equipment on a Fridaynight ready for the Monday morning crew. Sometime over the weekend,a tractor pulling an empty flatbed trailer pulls on to the jobsite. The driver has been watching the site for several days nowand knows where the newest grader is parked. Within minutes thegrader is moved onto the flatbed truck, tarped for concealment anddriven down the highway. It will shortly be in a container andready for shipment to a new owner.

Whether it is a $250,000 grader or a $10,000 generator, as muchas $1 billion a year of construction equipment and tools are lostnationwide due to theft, according to the National Insurance CrimeBureau, and 90 percent is taken directly from the work site. Theftis the number one cause of heavy equipment insurance claims,according to the Insurance Services Office, and accounted for 55percent of all equipment claims in 2002.

With losses for heavy equipment thefts increasing by 64 percentbetween 1995 and 2001, its a trend that insurance industryprofessionals can't ignore.

Some of the cumulative effects of equipment theft may bedifficult to quantify. For instance, when equipment is stolen,businesses lose money due to short-term rental costs and projectdelay penalties. Contractors must also spend valuable time dealingwith police and insurers.

Equipment theft also drives up the cost of insurance premiums.Equipment owners with poor loss records may even find it difficultto locate an insurance carrier that is willing to insure theirbusiness.

While it may be nearly impossible to totally eliminate heavyequipment theft, agents and brokers are in a position to help theircustomers control the threat of such a loss. Most equipment isstolen by professionals who understand the value of these items andhow easy it is to sell. A recent police raid near Colorado Springs,Colo., uncovered an estimated $350,000 to $500,000 worth ofsuspected stolen heavy equipment, tools and other constructionequipment the work of a major burglary and theft ring, according tolocal press reports.

Working in tandem with loss control professionals, agents andbrokers can help their customers uncover multiple effective ways tomake the construction site and their equipment a less vulnerabletarget for thieves.

By sharing the following best practice tips with clients who areserious about protecting their heavy equipment from theft, agentsand brokers can get a jump start on the process:

? Provide specific security measures such as fencing, off-hourssecurity patrols and indoor storage arrangements for high-valueditems such as cranes, large earth moving equipment, mining and roadconstruction equipment.

? Consider equipping each piece of valued equipment with asatellite-tracking device such as LoJack for Heavy Equipment.

Insurance carriers may offer incentives such as premiumdiscounts or waived deductibles to clients who install these unitson their equipment. The recovery rates with these tracking devicesare quite high, proving them to be quite effective.

In 2002, some 87 percent of LoJack-equipped constructionequipment was recovered in less than 24 hours after being reportedto the police and 95 percent of that equipment was undamaged,according to LoJack Corporation in Westwood, Mass.

? Equip self-propelled mobile equipment with an ignition systemdisabling device and/or a transmission immobilization device.

? Install locking hardware on caps for fuel tanks and suppliesto resist tampering or the introduction of foreign substances.

? Equip all wheeled equipment with movement prevention devicessuch as locks, chains, removable wheels and removable trailerhitches.

Certain parking arrangements can be effective in limitingmovement as well, though this may increase the hazard from otherperils such as fire and/or flood.

? Establish and follow a series of “end-of-shift” securityinspection protocols that address and reinforce general companyguidelines and site-specific practices such as battery removal,ignition key removal, locking of housings and compartments.

? Take photographs of all pieces of equipment.

Catalog these photos and update as equipment is purchased andsold.

All lists should be segregated and maintained by job site.

Monthly inventories should be reconciled to ensure that thephysical location of all equipment can be assured. Individualequipment records should include serial numbers and any identifyingmarkings.

? Consider implementing the introduction of company serialnumbers that are placed in an inconspicuous location on theequipment.

Professional thieves often remove the equipment's VIN number,making it difficult to pinpoint the original source of the item.Photographs of these personalized numbers can be helpful in policerecovery if a theft occurs.

Equipment owners may also want to register their equipment withthe National Equipment Register to further assist in trackingstolen equipment.

While no method is foolproof, those who take an active role inpreventing equipment theft are less likely to incur needless lossesthat affect their company's bottom line. Project delays, decreasedproductivity, increased insurance premiums and hard-to-findequipment rentals all contribute to the impact of equipmenttheft.

Agents and brokers, along with loss control professionals, canhelp stem this national epidemic by encouraging equipment owners todevelop a tailored loss control plan and follow best practices toreduce their vulnerability to theft and avoid having theirequipment become another statistic.

L. Pat Stoik, ARM, CIC, is vice president of Chubb & Sonand Global Inland Marine Manager for Chubb Marine Underwriters. Mr.Stoik can be contacted at [email protected]

Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, March 19, 2004.Copyright 2004 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.