Why Insurance Is So Crucial For Equipment Rentals

February 20, 2023 3:58 pm Published by Leave your thoughts

Whether you’re a small-scale contractor or a larger-scale rental business, having a well-protected insurance plan is crucial. We’ll help you choose the right coverage and protect your business against all the potential challenges that come with equipment rentals. 

Peace of Mind 

Having peace of mind knowing your equipment is covered in case of damage, theft, or accident is an important part of running a rental business. It also lets your clients know that you are a reliable and trustworthy company. Whether you rent party supplies, construction equipment, or any other type of equipment, having insurance protection can help you and your customers. For example, Employee Liability Insurance protects you if your employees are injured in the course of their work. It also pays your defense costs if you are sued by a third party. Another type of insurance that is a must for equipment rentals is Property Insurance. This coverage will repair or replace your equipment in the event of damage. It is a more comprehensive policy than a standard damage waiver. It can include things like collision, falling objects, fire, and flood. It is a more expensive option, but it gives you the peace of mind of having a policy that is tailored to your business needs. 


When customers rent equipment from you, it can be lost, stolen or damaged. Your business could be held liable for these damages if you don’t have adequate liability insurance in place. One type of liability coverage that is often used by rental companies is a limited damage waiver (LDW). These typically pay up to a pre-determined amount of money for damage to rented equipment and reduce out-of-pocket expenses for the customer. The terms will vary from company to company, but most include a deductible. Some may also exclude losses like gross negligence or abuse. 

Excess Liability 

Excess liability insurance is a type of coverage that protects business owners from lawsuits and financial losses that exceed their primary liability limits. These policies bolster standard liability coverage like general liability and commercial auto, providing peace of mind for businesses of all sizes and in all industries. When a claim hits the per-claim or aggregate limits on your business insurance policy, excess liability kicks in. It can also provide extra protection for companies that are exposed to unique risks, such as cybersecurity, liquor liability, marine insurance, or pollution. The cost of excess liability insurance varies depending on your industry and risk level. A common scenario that can require excess liability is if your business gets sued for more than its CGL limits or if a neighboring company suffers loss from an accident that’s covered by your employer’s insurance but exceeds your personal general liability coverage. The excess liability policy would cover the remaining $1 million of the damage that your personal general liability insurance coverage wouldn’t. 

Business Interruption 

Business interruption insurance helps keep your business going when you can’t operate because of a covered loss. It compensates you for revenue you’d normally earn if your business was open, such as salaries and rent. The amount of coverage you need depends on your industry and the value of the property your business owns or leases. A higher value can mean a larger payout. In the case of a natural disaster, you may also need extra expense coverage to help you cover expenses related to the physical damage such as the costs to relocate to another location or hire additional employees to assist in replacing equipment. Business interruption coverage is typically included in commercial multi-peril property policies and business owners policies (BOPs). It’s also often included as an endorsement or a stand-alone policy. 

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