Each year, insurers and owners across the nation suffer an estimated $1 billion in losses due to theft of heavy equipment such as backhoe loaders and tractors.Reports to the Insurance Services Office have shown an increase of up to 20 percent in the value of equipment thefts every year since 1996 and show theft as the most common cause of loss for heavy equipment–more than 50 percent.Hundreds of millions of dollars of equipment are stolen each year due to the frequent lack of vehicle security on farms and remote work sites. Because of the complex nature of identifying heavy equipment and a lack of accurate data on missing and stolen equipment for law enforcement, as little as 10 percent of this equipment is ever recovered. The Alabama Department of Agriculture and Industries received 439 cases dealing with farm equipment thefts and livestock issues from 2002 to 2003. With a team of eight investigators, the department recovered nearly $790,000 in heavy equipment theft.”Equipment theft is easy mostly because the farmer makes it easy,” said Capt. Jimmy Miller, with the investigation division of the Alabama Department of Agriculture and Industries. “Some farmers will leave their tractor or piece of equipment sitting out in the open. Usually, the last place they used it is where they park it and leave it. This creates an easy opportunity for thieves.”The National Equipment Register (NER) recently published its 2003 Equipment Theft Report detailing the theft and recovery of heavy equipment using a database of more than 30,000 thefts. Although thefts were reported to NER in every state, the top five states (Texas, North Carolina, Florida, California and Georgia) accounted for 33 percent of the total number of thefts. Alabama ranked 16th and Mississippi was 24th in the nation for the most heavy equipment thefts.The report showed theft rates closely follow equipment volume–where there is more equipment, there is usually more theft. Apart from the “hot spots,” NER says the risk of an individual machine theft is no greater in one state than any other.According to Miller, the reward for the thief far outweighs the risk taken. Heavy equipment is very valuable and easy to sell in the used-equipment market. The machine can be disassembled and sold for parts, or the thief can ship the parts to another country. Investigators have found that in most circumstances, the money is used to support drug habits and to set up methamphetamine labs in rural areas. More often than not, if an item is recovered and a conviction is secured, the penalty is likely to be light.Heavy equipment is easier to steal than one might think. For instance, on a construction site, a few employees may operate the same backhoe and it may be taken to several different job sites. If someone loads the backhoe onto a trailer and drives away, most of the time, no one notices because it’s a common procedure. On a farm, smaller tractors can be quickly loaded onto a 16-foot trailer, never to be seen again. A big problem in equipment recovery is the time lapse from the theft to its discovery. “I’ve investigated hay equipment thefts that haven’t been reported until months after it was probably stolen,” Miller said. “In the fall when farmers get through with their hay balers, hay rakes and mowers, they put them in a shed or barn and then won’t see them again until spring. Come springtime, the equipment is gone and we have no way of knowing exactly when it was stolen.”As with hay balers, equipment owners with larger fleets or multi-site operations may not discover the theft for days, weeks or even months. This gives the thief a window of opportunity when any investigation by law enforcement will not find a theft report. Suspicious activity such as moving equipment at a strange time of day or on ill-suited transport is most likely to occur during this window of time.According NER’s report, tractors, backhoe loaders and skid steer loaders account for 69 percent of the most commonly stolen types of equipment. While excavators and dozers are the most valuable equipment in the top 10, the former are most easily transported. “Each year, Alfa has a number of theft losses to farm equipment in Alabama,” said Alfa Insurance Farmowner Underwriting Manager Rex Seabrook. “Smaller, all-terrain vehicles such as four-wheelers are particularly vulnerable to theft. The theft exposure is substantially increased when the equipment is left overnight at a remote location. Loss prevention on the part of the insured is critical to prevent increased rates, higher deductibles or policy exclusions.”To help prevent theft, Seabrook suggests farmers never leave the key in the ignition or hide it on the equipment. He says, whenever possible, do not leave the equipment parked in the open and always hide a business card or some other type of identification in or on the equipment to help the authorities identify it. Other tips compiled from the NER and Alabama Department of Agriculture and Industries include:
• Park equipment in a location inaccessible to the public, behind gates or under lights at night.• Be attentive to people around the equipment or the job site.• Install heavy-duty hasps on all vans, trailers and storage sheds, and secure with a professional grade padlock. • Order new equipment with deluxe instrument panels that include a keyless start security system or install a similar system in current machines. • Secure smaller items to larger items and trailers with security chains. When a theft is discovered and reported to the police, there are a number of details needed for the equipment loss report. Following the advice listed below can increase the chances of recovering stolen equipment:• Mark all equipment with a company logo or a bright color pattern. This will make property less desirable to thieves and easier to identify if stolen. • Take photos of items with unique traits to help police investigators easily identify it.• Record the Product Identification Number (PIN) and serial numbers. Keep the list up-to-date and store it at a safe, off-site location. Police will enter the PIN into the National Crime Information Center database to help find stolen items.• Register equipment with manufacturers who have a registration program or with a nationally recognized organization such as the NER (www.nerusa.com).The NER suggests equipment owners focus their risk management efforts on high-value equipment that can be easily transported. When buying equipment, make sure the purchase price fits the market value of the item, and check for missing PIN plates. When in doubt, contact the police department for an investigation.Candice McDaniel is a marketing communications specialist with Alfa Insurance Co.