A contractor client of mine approached me recently to let me know that he is renting heavy equipment and that the rental company requires proof of insurance. A certificate of insurance was pretty simple to put together for him, but I wanted to dig deeper. I asked for a copy of the rental agreement because I really need to see what his exposure was when he rented from them.
When you rent equipment, you have to keep in mind that the possiblility of the equipment being damaged exists. When a rented piece of equipement gets damaged while in your possession, you will generally be resposible for one of 2 things:
- Repairing the equipment based on the Renter’s terms and conditions – including a pre-set labour rate, pre-set component prices etc.
- Replacing the piece of equipment that was damaged – sometimes brand new, sometimes a really good used one.
Let’s not forget why you rented this equipment – you did not want to buy it. Your commercial insurance policy has to react to this, but will only do so if you give it the proper tools to do so. Therefore, you will want to make sure that you have a rented equipment rider attached to it. This rider may fall under different names, but it does the same thing: gives you protection for the perils that you are exposed to when renting big and small equipment.
Here is a bit of information that you will need to know:
- The insuring limit – the value that you will want to insure will be the value of the items that you are renting
- The length of time that you rent the equipment for each time
In the end, you will have to determine if you want to buy the insurance (that is not officially insurance) from the rental company – usually 10 – 15% of the rental value, or to just add it to your annual policy.
Criteria for choosing:
- Once in a while – I would probably buy the insurance from the renter
- Frequent rentals – I would probably insure it on your own commercial insurance policy