The cost of insurance is unlikely to be something that puts a smile on your face. Reducing the cost of insurance is, therefore, important to all businesses. One way you can do this is by using GPS tracking devices. But is this type of 'self-insurance' really a good option?

Yes, self-insurance using telematics is a viable option for non-powered assets such as generators, containers, trailers, and other types of plant equipment.

Instead of paying an insurance premium to protect assets against the risk of theft, you can use telematics - GPS tracking devices.

Thefts on the increase

The recovery rate for stolen assets can be as low as 10 percent. There are many reasons for this including:

• Lack of identifiers: Unlike vehicles such as trucks or cars, which have number plates and VINs, plant and equipment often lack distinct markings to identify individual assets.
• Security risks: Plant and equipment are typically not secured with high levels of protection, making them more vulnerable to theft.
• Ease of theft: These assets are often easy to steal and use, as it’s relatively simple to create duplicate keys for many types of equipment.

Telematics can replace theft insurance

The following process is fairly typical if an insured non-powered asset is stolen from your business:

1. Report the theft to the police as they are responsible for the recovery
2. Claim from your insurance company
3. Insurance company processes the claim
4. Insurance company assesses the claim
5. The insurance company reimburses you according to your policy

With GPS tracking, however, the process is much simpler, quicker, and less costly:

1. When an asset is stolen you log into your account to get a real-time location for the asset.
2. You go to that location, potentially with the police, to recover what's yours.

This is possible because GPS tracking devices ping their location at regular and frequent intervals. Good quality devices, such as Smartrak's Remora, also have recovery mode options to help you locate the asset faster and with greater accuracy.

Advantages of self-insuring with telematics

Most businesses use the insurance route because it's what they've always done - you protect the assets in your business that have value by insuring them. However, just because it is the way you have always done it doesn't mean it is the most effective or efficient way. The benefits of using GPS tracking to protect your business against the risk of theft saves you money, reduces downtime, and uses fewer resources.

Save money

Telematics solutions are often much cheaper than the expensive insurance premiums you must pay to get theft coverage on your non-powered assets. In addition, high-value assets are more expensive to insure than assets that have a lower value. With telematics, however, the cost is fixed regardless of the value of the asset. This can make it considerably cheaper to ensure high-value equipment.

Reduce downtime

Theft insurance pays out eventually so, strictly speaking, you are not out of pocket. This is only in relation to the value of the asset, however. What about downtime in your business? What about the inconvenience of not having use of the asset while the insurance company completes your claim? Can you afford to wait, or will you have to incur costs to replace the asset before the insurance company pays out?

With a telematics solution, you will experience considerably less downtime in the event of theft. In fact, it is possible to identify the location of the asset within minutes of discovering the theft. Therefore, the only downtime is the time it takes you to make the recovery.

Use fewer resources

Following on from the last point, you will spend much less time dealing with theft in your business when you have GPS tracking devices installed. For example, you won't have to fill out lengthy claims forms or make follow up phone calls to your insurance company.

This leads to another benefit too - GPS tracking makes it more viable to protect lower value equipment from theft. This is equipment that you may not currently have insurance coverage on. The fixed cost of telematics solutions and the fact you can recover assets quickly means you might be able to protect lower value assets from theft too.

Telematics as a solutions

Telematics cannot replace all the insurance premiums you must pay each year, but using telematics to self-insure through non-powered asset tracking is something well worth considering.