Rancho Mesa's Alyssa Burley and Account Executive of the Tree Care Group Rory Anderson talk about the importance of properly insuring large tree care equipment.

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Director/Host: Alyssa Burley

Guest: Rory Anderson

Producer/Editor: Megan Lockhart

Music: "Home" by JHS Pedals, “News Room News” by Spence

© Copyright 2023. Rancho Mesa Insurance Services, Inc. All rights reserved.

TRANSCRIPT

Alyssa Burley: Hi, this is Alyssa Burley with Rancho Mesa's Media Communications and Client Services Department. Thank you for listening to today's top Rancho Mesa News. Brought to you by our Safety and Risk Management Network, StudioOne. Welcome back, everyone. My guest is Rory Anderson, Account Executive with Rancho Mesa. He specializes in commercial insurance for the tree care industry. And today we're going to talk about properly insuring large tree care equipment. Rory, welcome to the show.

Rory Anderson: Hey, Alyssa, thanks for having me back. It's good to be here.

AB: Of course. So it's no secret that everything is more expensive between inflation and supply chain issues. The cost of equipment is steadily increasing. And as the tree care industry becomes more mechanized, we see new technological advancements in machinery and equipment that are greatly improving things like productivity, profitability and safety throughout the industry. But these big ticket equipment purchases are a major investment for these businesses. So, Rory, why is it important for tree care business owners to understand how their equipment is valued with regards to scheduling it for their insurance?

RA: Yeah, you know, you hit on the head and there's a lot to unpack there. But yes, the tree care industry is becoming more mechanized, which is great. I mean, you mentioned it's improving productivity, profitability and safety. And, you know, that is the intended use of these pieces of equipment is to improve all those things. And these new big ticket items, like you mentioned, are really expensive. The cost of of these assets is it's a large investment for the business owner. And, you know, from the insurance standpoint, we just want to be sure that the that those items are covered the right way, you know, in case of something happening, whether it's a total loss or or even just damage to the equipment, we just want to make sure that the insurance is set up the correct way so that you're not leaving, you know, a bad situation empty handed.

AB: So what do you recommend our clients do to make sure that if there is an incident, they lose a piece of equipment? How do you recommend that they ensure that that piece of equipment can be replaced?

RA: Yeah. Definitely. So there's kind of two aspects to this. The first one that I'll talk about would be valuation from the insurance carrier. So there is typically two common ways that equipment can be valued in insurance. You have the replacement cost value, which is the cost, new, today. And then you have the actual cash value, which is the depreciated value. So that would be replaced, the actual cash value would be replacement cost minus depreciation.

AB: Okay.

RA: So they would factor in the hours and the depreciation when paying out, you know, a claim if it's rated on actual cash value. So it's important to know the difference between the two. And it's really important to talk to your broker and ask them if they can get replacement costs on all pieces of equipment so that you have that, you know, safety and that understanding that if one of those items was to go out, you would be getting the cost new today from the insurance carrier. So that's the first aspect. And then the second aspect is make sure that you're valuing the pieces of equipment to today's dollar. And you mentioned earlier, Alyssa, that the you know, the cost of everything is going up. It's not just gasoline and groceries and things like that, but equipment, you know, between the supply chain issues that we're seeing, it's harder to get items. And then with inflation, you know, things are costing more. So the example that I always really like to give is a 2020 chipper cost more, new, today than it did in 2020. So if you, you know, just are annually basically renewing those policies at the same value, you're really doing yourself a disservice by not increasing those limits, as inflation starts to rise.

AB: Yeah. So if you have that 2020 chipper that gets stolen, if you try to replace it with another 2020 chipper, it's going to be more expensive than what it was valued at, right?

RA: Exactly. Yeah, that's it.

AB: So knowing how your insurance carrier is valuing your equipment in the event of a loss is really important. If you're trying to budget for some unexpected expenses throughout the year. And if you know that, you'll have to make up that difference between the actual cash value and a replacement cost, that's really important for you to plan for or make sure that on your policy it says that you're going to get replacement cost for for that piece of equipment. So what else do you think business owners need to know when scheduling their equipment?

RA: Yeah, So, you know, we talked about updating the values, right. And, you know, it should really be on your broker to be, you know, bringing these things up with you and discussing these. And we do what we call a pre-renewal meeting at Rancho Mesa, where we meet with our clients 120 days before the renewal meeting to discuss changes in operations, you know, changes in equipment. And this would come up during that meeting where we would say, hey, here's what you know, your item, here's where your items are currently valued with supply chain and with inflation issues. You know, we would recommend, you know, increasing these, well, what are your thoughts? And we discuss that. We have that conversation at that point in time so that we're really getting ahead of it. And so then we're also in line for an early renewal with accurate information. Right. We're not scrambling last minute. So that's that's an important aspect of this as well.

AB: Absolutely. And properly insuring your assets is a fundamental aspect of your risk management program. It is crucial for protecting your company's financial stability, business continuity and safeguards your reputation and operational stability. And we see that, you know, you don't want to have a loss and then have to tell your customers, hey, we can't do this job because we can't get a piece of, you know, equipment that needs to be replaced. So this is really important to make sure that business operations continue in the event of a loss. So, Rory, if listeners have questions about properly insuring their specialty equipment, what's the best way to get in touch with you?

RA: I can be reached at 619-486-6437. Or you can drop me an email at randerson@ranchomesa.com.

AB: All right. Well, Rory, thanks as always, for joining me in Studio One.

RA: Yeah, it's my pleasure. Thanks.

AB: This is Alyssa Burley with Rancho Mesa. Thanks for tuning into our latest episode produced by StudioOne. For more information, visit us at ranchomesa.com and subscribe to our weekly newsletter.