Lifting equipment hire: who is responsible in the event of an incident?
Only 20% of companies take out insurance when hiring cranes. The other 80% are exposed to the general conditions of hire in the case of in incident which could invoke their direct liability. Decoding hire and service agreements so that companies operating in the construction and public works sectors are better informed.
Better understanding the different types of lifting equipment rental contracts
As expensive pieces of equipment with repairs costing several tens of thousands of euros, cranes are subject to specific contracts. However, construction and public works companies are often guilty of not reading the general conditions of hire and are therefore not aware of their responsibilities in the event of an incident.
The general conditions of hire with an operator are governed by the UFL or French Lifting Union, and there are two types of rental contract:
- Service delivery
- Simple hire: provision of lifting equipment with a driver
Within the context of a service delivery contract, the Owner must provide the workforce (crane operators, riggers and banksman) and the ancillaries needed to complete the operation. It must carry out all of the preliminary studies and checks (lifting plan, equipment working area, ground resistance, weight of loads to be lifted, etc.). It will be held liable for all operations from start to finish. In the event of an incident relating to lifting operations, the Owner is liable for all tangible and intangible damage caused to third parties and all damage caused to the equipment.
In the case of simple hire, from the time that the equipment and/or its ancillaries are supplied, their physical and legal custody is transferred to the hirer who bears all risks. The operating staff (crane operator, lifting contractor’s staff) become representatives of the hirer.
In these conditions, the hirer is responsible for the duration of the work (duration of hire) for tangible and intangible damage caused to third parties and all damage caused to the equipment, regardless of the cause (overloading, ground subsidence, broken sling, etc.). Only damage resulting from a hidden defect on the equipment (mechanical breakage for example) can invoke the liability of the owner.
Simple equipment with driver rental contracts are the most common, because they are the least costly.
Liability in the event of an incident involving cranes: a complicated situation
80% of crane rental contracts for construction sites are contracted by tradesmen or SMEs without specific insurance performing ad-hoc lifting operations. The other 20% involve large construction and public works companies or industrialists who generally take out a machine damage policy for the hired construction equipment.
In the case of a simple rental contract, if an incident occurs, the loss adjusters appointed by the owner’s insurance company are required to implicate the hirer who is contractually fully liable for the damage to the hired equipment. However, in 90% of cases, hirers will not have purchased machine damage policies from their insurers to cover damage to the hired equipment and 99% of public liability agreements do not cover damage to hired motorised land-based equipment. Legal action becomes very complicated and can only be taken against the hirer and not its insurers. As repair costs for lifting equipment (road cranes) are generally high, taking action against an uninsured company is more complicated.
Better inform: some best practices
There are many ways to avoid insurance problems in the event of an incident. Prevention and information are at the heart of best practices.
Insurers, agents and brokers can:
- Better inform their policyholders of the risks inherent to hiring motorised land-based equipment;
- Suggest products to cover the ad-hoc hire of motorised land-based equipment;
- Suggest optional cover in Public Liability agreements;
- Revise the contracts offered to lifting contractors so that they can offer their clients (the hirers) additional machine damage insurance which would relinquish them in the case of legal action.
Lifting contractors (Owners) should:
- Ensure that the hirer reads the general conditions of hire;
- Inform the hirer of the risks for which it is liable in the event of an incident;
- Demand the compulsory presentation of a certificate of insurance covering damage to the hired equipment.
Nicolas GALLET – Partner loss adjuster, Lifting specialty manager