Equipment Rental Insurance Policy Information
Equipment Rental Insurance. Do you own a company that rents out equipment? Whether it's heavy machinery, gardening tools, party supplies, or audio-visual equipment, you've invested a lot in the equipment you rent out.
Not only do you need to make sure that your gear is protected, but you also have to think about the liability risks that are associated renting out equipment.
Contractor equipment rental companies provide heavy equipment to customers who do not need these frequently enough to justify the purchase, such as bulldozers, excavators or cranes. Equipment may be rented with an operator or without.
Equipment may be rented on a short-term basis, or on a longer-term lease. Delivery and pickup services may be offered. Payments may be made at the time of rental for items needed for a short period of time, or periodically over the life of a lease. Unless a lease specifies differently, the rental company is responsible for maintenance and major repairs.
When you own a business that rents out equipment, the perils you face are very real. You may rent a piece of equipment to someone who subsequently becomes injured by the equipment. If this happens, you may be held responsible and held liable for the ensuing damages, including any medical costs and any costs for property loss.
Equipment rental insurance can mitigate your losses and help your business maintain its growth despite any claims and lawsuits that might arise.
How can you protect your equipment, your business, and yourself? - By investing in the right type of commercial insurance. What kind of coverage do you need? Read on to find out more about equipment rental insurance:
Equipment rental insurance protects your business from lawsuits with rates as low as $37/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked equipment rental insurance questions:
- What Is Equipment Rental Insurance?
- How Much Does Equipment Rental Insurance Cost?
- Why Do Equipment Rental Companies Need Insurance?
- What Type Of Insurance Do Equipment Rental Companies Need?
- What Does Equipment Rental Insurance Cover & Pay For?
What Is Equipment Rental Insurance?
Equipment rental insurance is a type of insurance that protects equipment rental businesses from financial loss due to damage, theft, or other incidents involving the equipment they rent out. It covers the cost of repairing or replacing the damaged equipment, as well as any lost income due to the downtime of the equipment.
This type of insurance also provides liability coverage in the event that the equipment causes damage to someone else's property or injury to a third party.
The insurance policy can be customized to fit the specific needs of the equipment rental business and can include coverage for a wide range of equipment, such as heavy machinery, tools, and party equipment.
How Much Does Equipment Rental Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small equipment rental businesses ranges from $37 to $99 per month based on location, type of equipment rented, payroll, sales and experience.
Why Do Equipment Rental Companies Need Insurance?
When you rent out equipment, you are counting on your clients do use it responsibly and return it to you in the same condition you gave it to them. You're also hoping that your equipment will work properly and won't malfunction.
But what happens if something goes wrong? A customer damages your video equipment, steals the party supplies that you rented out, or if a piece of heavy machinery malfunctions and injures a customer?
The cost of repairing damaged or stolen equipment could be astronomical. If a customer files a lawsuit against you, the financial impact could be even more severe. To avoid the risk of having to pay for such expenses out of your own pocket, investing in proper rental equipment insurance coverage is vital.
In the event that something does go awry, with the right insurance coverage in place, instead of paying the expenses yourself, your insurance company would cover them for you. In other words, equipment rental insurance can save you from financial devastation.
What Type Of Insurance Do Equipment Rental Companies Need?
The type of insurance you'll need depends varies and depends on a variety of factors; the specific type of equipment you rent out, where you're located, and whether or not you employ a staff, for example.
The best way to find out what type of insurance you'll need is by speaking with a reputable agent who has experience with commercial insurance.
With that said, however, there are certain types of coverage that all equipment rental business owners should invest in:
- General liability coverage. This insurance covers the cost of third-party bodily injury and property damage claims. For example, if a customer files a lawsuit against you, stating that your equipment injured them or damaged their property, general liability insurance would help to pay for any legal expenses, as well as medical care that the customer may require, and any repairs that may need to be made to their property.
- Commercial property. This type of insurance covers the cost of any damages that the physical structure of your commercial property may sustain as a result of certain perils, such as fire, vandalism, and theft. It also covers the contents within the building, including your rental equipment.
- Inland marine coverage. Your commercial property and equipment insurance won't cover your rental equipment unless it's on your property. To do that, you'll need to invest in inland marine insurance. This policy covers moveable properties while they are in-transit and while they are stored on another site outside of your own property. For example, if your construction equipment is damaged, stolen, or vandalized when it's off the premises of your commercial property, inland marine insurance will cover the repair or replacement expenses.
- Commercial vehicle insurance. Auto insurance to cover your business vehicles is important. This coverage should extend to your employees who use company vehicles.
- Worker's compensation. If you employ a staff, you'll also need to carry workers comp. If an employee suffers an injury while delivering a piece of your rental equipment to a client, for example, workers' compensation will help to pay for any related medical expenses, as well as any wages the employee may lose if he or she is unable to work while recovering.
Your Rental Business Agreement
In general, your business should have an attorney-approved rental agreement in place to allocate the responsibility of damage or loss of your rental items. This agreement should also address liability claims and the responsibility of payment of those claims.
Still, regardless of the responsibility assigned to the customer by the rental agreement, your business still needs adequate equipment rental insurance coverage. For instance, if there is a possibility that your customer lacks the knowledge or skill for proper equipment use, you may be left liable. If the customer loans out the equipment to someone else prior to returning it, you can be held responsible for losses or injury from the third party.
The customer might also be unwilling to meet the obligations laid out under the agreement. It may also be the case that the customer absconds with the property, leaving you holding the bag for replacement. In these scenarios, the right level and type of coverage can mitigate these losses and leave your business whole again.
If you rent out equipment that has a high replacement value, it may be best practice to require that the customer purchase insurance that covers any liability or loss for both the customer and your business and furnish you with a certificate of insurance to prove coverage.
Equipment Rental Companies Risks & Exposures
Premises liability exposure is moderate due to customers coming to the premises. Aisles must be adequate in size and free of debris with flooring in good condition. There should be no frayed or worn spots on the carpet, and no cracks or holes in the flooring. Sufficient exits must exist and be well marked, with backup systems in case of power failure. Parking lots and sidewalks need to be in good repair with snow and ice removed, and generally level and free of exposure to slips and falls.
Contractors' equipment stored in the yard presents an attractive nuisance to children and teens. Fencing and barriers must be in place to prevent entrance, and the equipment disabled. Off-premises exposures are high, especially if the equipment is rented with an operator as liability extends to that employee and the use of the equipment. To limit contractual liability exposures, all items must be in good repair and not be altered in any way as any alteration could place the product liability exposure on the rental company.
There must be documented maintenance of the items in case an accident does occur and the product manufacturer cites lack of proper maintenance. Instructions for proper usage and all warnings about the product must be provided to the client. Machinery or equipment that could cause serious injury to the operator needs careful demonstration and instruction. The age and condition of the equipment are also critical.
Products liability exposure arises from the sale of used rental equipment. Items sold should be in good condition, without any modification, and should have all guards and protective devices intact.
Environmental impairment liability exposure is high due to the potential for contamination or air, surface or ground water, or soil from spillage or leakage of fuel storage tanks or the collision or overturn of heavy equipment or their transporting vehicles. If there are underground storage tanks, a UST policy will be required. All storage and disposal procedures must meet federal and state regulations.
Workers compensation exposure depends upon the type of maintenance and repair done to the rental equipment and whether items are rented with operators. Injuries may include cuts, amputations, burns, welding-related losses, back sprains, and hernia from lifting, foreign objects in the eye, slips, and falls. If the setup is done at customers' job sites or equipment is rented with operators, the rental company has little control over the customers' premises or hazards which may be in isolated areas or on rough terrain.
Employees can be injured off-site by slips and falls, rollover of machinery, falling objects, falls from heights, construction machinery of others, flying debris, or noise. Rupture of a fuel line could result in an explosion. A malfunction in the wiring could present a fire or electrocution hazard. If employees must handle any repossession, they may be assaulted or otherwise endangered during the repossession activity.
Since work at the office is done on computers, potential injuries include eyestrain, neck strain, carpal tunnel syndrome, and similar repetitive motion injuries that can be reduced with ergonomically designed workstations.
Property exposures include an office, storage and maintenance area, and yard for heavy equipment. Ignition sources include electrical wiring, heating and air conditioning systems, overheating of equipment, welding, and soldering. Flammable liquids such as paint, varnish, glue, and fuels used on-site for repairs and refueling must be stored away from heated areas in a fireproof cabinet. When welding and soldering take place on premises, they should be done in a well-ventilated area that is free of combustible materials.
Some equipment may require high voltage to operate, increasing its susceptibility to fire. All items must be stored in such a way that fire will not spread quickly. Unless disposed of properly, greasy, oily rags (such as those used to clean machinery) can cause a fire without a separate ignition source. Aisles must be kept free of debris. Property stored in the open may be subject to loss by wind or hail or a target for vandalism.
Appropriate security controls must be taken including lighting and physical barriers to prevent entrance to the premises after hours and an alarm system that reports directly to a central station or the police department. Business interruption is a significant exposure, as large equipment rental tends to be seasonal. Loss of or damage to a large or expensive piece of equipment may result in the item not being available at a critical time.
Crime exposure is from employee dishonesty and money and securities. The exposure increases in the absence of background checks of all employees. Heavy equipment is expensive and a target for theft. Items must be carefully inventoried as they leave from and return to the premises to prevent employee intervention. All ordering, billing, and disbursement should be handled as separate duties. Frequent deposits should be made. Audits should be conducted annually.
Inland marine exposure is from accounts receivable if the company offers credit, computers, contractors' equipment, and valuable papers and records for customers' and suppliers' information. Ideally, equipment should be rented with a qualified operator who is aware of the proper use and handling of the item and who can refuse to do something that would exceed its capacity or otherwise endanger it.
When equipment is rented without the operator, instructions and clear guidelines must be provided as to how the equipment may and may not be used. The contract should hold the client legally liable for the items while in their care, particularly if the rented items are used to lift beyond their capacity, but secondary coverage is needed, as the customer may not be able to cover the cost.
Contractors' equipment may be damaged by fire, wind, hail, collision, overturn, or while being loaded or unloaded onto transporting vehicles. Theft is a concern as items are often left unattended at job sites or in storage yards at night and on weekends. The equipment should be disabled while not in use to reduce the potential for theft.
Commercial auto exposure may be limited to hired and non-owned for employees running errands. If pickup and delivery services are offered, the exposure increases significantly due to the potential for loss while loading, unloading, and transporting equipment. Transportation of heavy equipment requires careful loading and tie-down to prevent items from coming loose and toppling over during transport. Drivers should have an appropriate license and an acceptable MVR. All vehicles must be well maintained with documentation kept in a central location.
What Does Equipment Rental Insurance Cover & Pay For?
Equipment rental claims can arise when the equipment rented out by a rental company causes damage or injury to people or property. Here are some examples of such claims and how equipment rental insurance can help pay for the lawsuit:
Injury to a customer: A customer rents a generator from a rental company for a construction project. While using the generator, the customer suffers an electrical shock and sustains injuries. The customer files a lawsuit against the rental company for the injuries suffered. Equipment rental insurance can help pay for the legal fees and damages awarded to the customer.
Property damage: A rental company rents out a bulldozer to a construction company. While operating the bulldozer, the operator accidentally hits a parked car and causes significant damage. The owner of the car files a lawsuit against the rental company for the cost of repairs. Equipment rental insurance can help pay for the legal fees and damages awarded to the car owner.
Liability for equipment failure: A rental company rents out a cherry picker to a roofing company. While using the cherry picker, the platform suddenly collapses, causing damage to the roofing and injuring the workers on the platform. The roofing company files a lawsuit against the rental company for the damage and injuries suffered. Equipment rental insurance can help pay for the legal fees and damages awarded to the roofing company and the injured workers.
Breach of contract: A rental company rents out a crane to a construction company for a specific period. However, the rental company fails to deliver the crane on time, causing the construction company to suffer losses. The construction company files a lawsuit against the rental company for breach of contract. Equipment rental insurance can help pay for the legal fees and damages awarded to the construction company.
In general, equipment rental insurance can help cover the costs of legal fees, damages, and other expenses associated with a rental company's liability for injuries or damage caused by their rented equipment. It's essential to have adequate insurance coverage to protect your rental business from financial losses.
Commercial Insurance And Business Industry Classification
- SIC CODE: 7353 Heavy Construction Equipment Rental and Leasing, 7359 Equipment Rental and Leasing Not Elsewhere Classified
- NAICS CODE: 532412 Construction, Mining and Forestry Machinery and Equipment Rental and Leasing, 238910 Site Preparation Contractors, 238990 All Other Specialty Trade Contractors
- Suggested Workers Compensation Code(s): 8107 Contractors Machinery Dealer & Drivers, 8010 Store - Hardware, 9534 Mobile Crane and Hoisting Service Contractors - NOC - All Operations & Drivers
Description for 7353: Heavy Construction Equipment Rental and Leasing
Division I: Services | Major Group 73: Business Services | Industry Group 735: Miscellaneous Equipment Rental And Leasing
7353 Heavy Construction Equipment Rental and Leasing: Establishments primarily engaged in renting or leasing (except finance leasing) heavy construction equipment, with or without operators.
- Bulldozer rental and leasing
- Construction equipment, heavy: rental and leasing
- Crane rental and leasing
- Earth moving equipment rental and leasing
Description for 7359: Equipment Rental and Leasing Not Elsewhere Classified
Division I: Services | Major Group 73: Business Services | Industry Group 735: Miscellaneous Equipment Rental And Leasing
7359 Equipment Rental and Leasing, Not Elsewhere Classified: Establishments primarily engaged in renting or leasing (except finance leasing) equipment, not elsewhere classified.
- Airplane rental and leasing
- Appliance rental and leasing
- Coin-operated machine rental and leasing
- Electronic equipment rental and leasing, except medical and computer
- Furniture rental and leasing
- Industrial truck rental and leasing
- Office machine rental and leasing, except computers
- Oil field equipment rental and leasing
- Oil well drilling equipment rental and leasing
- Party supplies rental and leasing
- Piano rental and leasing
- Plants, live: rental and leasing
- Rental and leasing of dishes, silverware, and tables
- Television rental and leasing
- Toilets, portable: rental and leasing
- Tool rental and leasing
- Vending machines, rental only
- Video recorder and player rental and leasing
Equipment Rental Insurance - The Bottom Line
Work with a commercial agent when choosing equipment rental insurance. Your agent is adept at understanding your unique needs and can recommend the right level and type of coverage for you and your business. By explaining your business model and the risk that customers may face when renting from you, your agent is better able to understand how much insurance, the type of equipment rental insurance insurance, and the level of coverage that your business needs.
Your agent can customize your insurance package to meet your needs and can compare rates for insurance policies that meet your needs with different companies. This gives you the ability to find the right equipment rental insurance policy for your budget.
Additional Resources For Retail Insurance
Read valuable small business retail insurance policy information. In a retail business, you need to have the right type of commercial insurance coverage so that your store, employees, and inventory are protected.
- Adult Novelty
- Antique Dealers
- Appliance & Electronics Store
- Army Navy Surplus Stores
- Art Dealers
- Art Gallery
- Arts & Crafts Supply Stores
- Bicycle Shop
- Boat Dealers
- Book Store
- Bridal Shop
- Candy Confectionery Store
- Carpet Store
- Cell Phone Stores
- Clothing Store
- Collectibles Memorabilia Store
- Consignment Stores
- Convenience Store
- Cosmetics Store
- Costume Stores
- Dry Cleaning
- Embroidery Services
- Equipment Rental
- Fabric Stores
- Fish Markets
- Flea Markets
- Funeral Home
- Furniture Store
- Gift Store
- Greeting Card Stores
- Hardware Store
- Harness & Saddle Shops
- Home Improvement Store
- Infant, Baby & Children's Clothing Stores
- Jewelry Store
- Lamp Stores
- Lingerie Store
- Luggage Store
- Meat Market & Butcher Shop
- Men's Clothing Stores
- Music Store
- Office Supply Store
- Paint & Wallpaper Store
- Pawn Shop
- Pet Store
- Pharmacy Liability
- Plumbing Supplies Fixtures Store
- Poultry Dealers
- Rent To Own Stores
- Scrap Metal Dealers
- Sewing Store
- Shoe Store
- Sporting Goods Store
- Stationary Store
- Thrift Store
- Ticket Agency
- Tire Store
- Tobacco Store
- Toy Store
- Travel Agency
- Trophy Stores
- Tuxedo And Formal Wear Rental Store
- Vending Machine Operators
- Wig Store
- Women's Clothing Stores
- Specialty Retail Stores
The retail industry is a vital sector of the economy, providing goods and services to consumers across the globe. It is also a sector that is constantly evolving, with new technologies and trends emerging on a regular basis.
Despite its importance, the retail industry is not without its risks. Retail businesses face a variety of threats, including theft, damage to property, and liability issues. These risks can have significant financial consequences for retail businesses, which is why commercial insurance is so important.
Insurance can provide retailers with protection against financial loss resulting from unforeseen events. For example, if a retail store is damaged by a natural disaster, insurance can help cover the cost of repairs and help the business get back on its feet. Similarly, if a retail employee is injured on the job, insurance can help cover their medical expenses and any lost wages.
In addition to protecting against financial loss, commercial insurance can also help retail businesses protect their reputation. If a retail business is sued or faces other legal challenges, insurance can provide financial support and legal representation. This can help to protect the business's reputation and maintain customer trust.
Overall, insurance is an essential component of a successful retail business. It helps to safeguard against financial loss and protect against potential legal challenges, which can be especially important for smaller businesses that may not have the resources to absorb these types of losses.
By investing in business insurance, retail businesses can ensure that they are well-equipped to handle the many challenges that come with operating in this dynamic industry.
Minimum recommended small business insurance coverage: Business Personal Property, Business Income and Extra Expense, Equipment Breakdown, Employee Dishonesty, Money and Securities, Accounts Receivable, Computers, Valuable Papers and Records, General Liability, Employee Benefits, Umbrella, Hired and Non-owned Auto & Workers Compensation.
Other commercial insurance policies to consider: Building, Earthquake, Flood, Leasehold Interest, Real Property Legal Liability, Computer Fraud, Forgery, Bailees Customers, Goods in Transit, Jewelers Block, Cyber Liability, Employment-related Practices, Business Auto Liability and Physical Damage and Stop Gap Liability.