Make Sure You're Covered for Loss of Use

At 11:40 p.m. April 14, 1912, the world's largest, and supposedly safest, cruise ship became infamous when it hit an iceberg and sank into the North Atlantic Ocean.

The part of the iceberg that's visible can be huge.

But as many of us have heard in life lessons as we are growing up: What we see is often only a fraction of what really is.

The vast expanse of the iceberg that lurks below the surface is much more immense than what we see above the water. Just look at the picture.

A rigger's liability claim can be a lot like an iceberg: The easy-to-see direct damages on the surface may be dwarfed by the less-obvious loss-of-use damages hiding below.

Above The Surface

This is the portion of the rigger's liability claim that we are aware of. It's known as direct damages.

As an example, image that you drop a commercial air conditioning unit as you're lifting it to the top of a hotel.

The direct damage is the cost of the unit. You may think: "This is an expense that we can swallow. I know what it costs and can account for it. This won't sink us."

I wonder whether the Titanic captain Edward Smith was similarly confident as his sturdy vessel first came into contact with the iceberg.

Remember which portion of the iceberg tore open the Titanic's hull and caused the seemingly indestructible ship to sink. It was not the part above the surface. It was the unseen larger section below.

Below the Surface

This is the portion of the rigger's liability claim that many people are not aware of. It's called liquidable damages.

Let's say, for example, that the air conditioning unit you dropped is not readily available, and that the hotel depends on it to stay in operation.

Since the hotel is in Florida, it's the middle of summer, and the hotel has no cooling system, it has to shut down until a replacement can be found and installed.

As a result, the hotel owners sue you and your insurance carrier for the amount of money they could have made if every room were occupied at the highest price for all the nights that the hotel was shut down because it didn't have the air conditioning unit that you damaged.

A case like this really happened.

Think about this: How much have COVID-19 and worldwide supply chain disruptions extended the time needed to get a replacement for almost everything?

You can image how the cost of liquidable damages from extended downtime can spiral out of control.

Be Prepared for the Iceberg

Loss-of-use coverage helps you manage the below-the-surface part of a rigger's liability claim.

There are multiple ways to get loss-of-use coverage, but be careful which you choose.  They are not all equal.

Do not assume that "rigger's liabililty coverage" automatically protects you against loss-of-use claims.

Unfortunately, more often than not, we see crane and rigging operations that are somewhat like the Titanic.

The leaders of some companies look only at the visible part of the iceberg - direct damages - so they have a false sense of security in their insurance coverage.

They're unaware of the larger, more perilous, loss-of-use damages that lurk below the waterline.

Other executives are aware, but are convinced that standard rigger's liability coverage makes their operations unsinkable.

Do not let an uninsured, loss-of-use claim be your company's expensive wakeup call.  Make sure your rigger's liability insurance includes protection against loss of use.

With today's mountainous settlements, that kind of wakeup call could put your company underwater.

Cameron Boots is the area vice president of Gallagher's Crane & Rigging Insurance (formerly Allied Insurance Brokers). He is a preferred producer of the SC&RA, a past president of the American Society of Safety Professionals, and secretary of the Florida Crane Owners Council. He can be reached at mcameron_boots@ajg.com