How can I buy insurance for contractors’ equipment that I rented?
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Asked September 23, 2013
Many business owners mistakenly believe that having commercial insurance means they are covered for all equipment used on a job, but that is simply not the case. Commercial property insurance will cover your own tools while they are at a covered location, but it will not cover rental tools or insure any equipment while it is being transported or used on a site that is not included in your coverage plan. The policy you need for this type of coverage is called a contractor's equipment policy.
Contractor's equipment policies are designed especially to meet the needs of contractors who use expensive equipment, as well as to protect the company against damages which may happen to rental equipment. It is intended for larger pieces of equipment, such as backhoes, bulldozers, or compactors, but you can also purchase a policy to cover lower-valued items such as power tools by grouping a set of tools together under a single policy. In this case, you might have a policy with a claims upper limit of 2 or 3 hundred dollars per item while the total policy value might be in the thousands.
Even with a contractor's equipment policy, rental equipment or tools borrowed from a third party may not be automatically covered. Instead, you may have to add a special rider to the policy called a "rented and leased equipment rider." This rider may be included in commercial policies purchased from some insurers, but is commonly an add-on that is available by request.
Another option for protecting rental equipment is to purchase the per-item insurance offered by the rental company. This insurance is typically only a fraction of the cost of the rental, and fully covers the equipment against damages, theft, vandalism, misuse, and common perils such as fire and wind damage. This type of coverage is purchased at rental time, and has the advantage of expiring when the equipment is turned in, saving your company from paying for insurance coverage it does not need. Speak with a local insurance broker to discuss your insurance needs and select the right coverage.
Answered September 23, 2013 by Anonymous