What is a Dry Hire Agreement?

A Dry Hire Agreement is a contract between two parties, specific to the hire of plant and equipment under the exclusive direction and control of the hirer (no operator provided).

Dry hiring equipment is common in the civil and construction industries where equipment is required on a short term basis or for unique project purposes.

A Dry Hire Agreement will set the general terms and conditions between the two parties, relating to the hire of the equipment.

Why is Dry Hiring Equipment a Risk for Public Liability?

Whilst there are many reasons why, the most common reason relates to plant and equipment maintenance. Outside of general day to day maintenance, the owner is often responsible for servicing and maintaining the equipment. If this is not undertaken, then there is a potential that the owner can be held legally liable for property damage or personal injury caused by the machine, resulting from the lack of maintenance and upkeep.

What is a Damage Waiver Clause?

A Damage Waiver clause is implemented by the owner into the Dry Hire Agreement. The clause waives the owners and their insurer’s right to subrogate against the hirer for damage to the equipment. The guidelines for this will always rule out certain circumstances, such as the machine being operated outside the conditions of the agreement or the law. Damage Waivers are designed to provide peace of mind to the operator, should they find it difficult to find appropriate insurance for the equipment, especially for short term hire arrangements. The owner of the equipment will generally charge a fee to compensate the additional risk they are taking on, particularly if their insurance premiums are impacted by claims caused by the operator. Damage Waiver fees generally range between 10-15% of the hire charges. If hiring is

very incidental, it is often more cost effective to pay for the Damage Waiver fees as opposed to taking out an

Insurance policy as the hirer, particularly if they don't have an existing Plant Machinery policy.

General Tips

Whilst is financially beneficial to Dry Hire your equipment, it can prove to be a costly exercise if the operator causes damage or doesn’t look after the equipment appropriately. Not all Insurance policies will cover Dry Hire operations or extend to offer a Dry Hire Extension for Damage Waiver clauses. We recommending discussing this with an Insurance Broker, who will provide advice and source the most appropriate insurance solution for your business.

Disclaimer:

The information provided by Hunter Broking Group Pty Ltd on this website is for general information purposes only, and it is not a substitute for professional advice. You should always consider the PDS/Policy wording before making a decision. Coverage may differ based on specific clauses in individual policies. Refer to the FSG on our website or by requesting a copy for our services and remuneration details.