Whether renting heavy equipment for a commercial project or party equipment for a special event, rental equipment companies require you to purchase or show proof of insurance that protects them and their property. The company requires insurance that exempts them from liability claims, covers the cost of the equipment if it is lost or damaged and guards against liability for injury or death if the equipment is improperly used.
Under some rental contracts, the renters can provide their own insurance and name the rental agency as the payee for a specified amount on equipment. While this can be thought of as an exemption, it is simply a type of business umbrella policy that extends to leased or rented equipment under control of the policyholder.
Physical Damage Coverage
Physical damage coverage allows the equipment owner to file a claim for repairs if the machine is returned in a damaged or non-working condition. The coverage does not include damage that results from defects in the equipment, but it does apply to incorrect user-assembly that results in damage—such as a saw blade that is improperly installed. Physical damage does not apply to injury or other liability.
General liability insures the renter against claims of negligence or improper maintenance, and provides liability protection for the end-user and public at large. General liability covers people who are injured or killed, as well as incidental liability claims, such as incidents occuring where underground lines are damaged. The end-user is still liable for the damage, but the equipment and rental company are excluded from claims made in connection to the damage.
Personal Property Insurance
Many rental companies require the purchase of personal property insurance to guarantee "full replacement cost." This type of coverage allows the company to repair or replace the equipment if it is totaled, lost or stolen. Because equipment begins to depreciate almost as soon as it is purchased, this type of insurance fills the gap between the book value of the equipment and replacement cost.
Other Rental Insurance Costs
Where staff or technical skill is included in the lease of the equipment, the renter may be responsible for workers' compensation insurance or other costs. Transportation included in the lease must be insured with the minimum insurance defined in the contract. This typically includes the state insurance requirements and full replacement cost coverage on the vehicle itself. Because each company will have different policies, ask about insurance before signing equipment rental contracts.
Roger Golden began his career as a writer in 2008, when he began writing weekly insurance and personal finance articles. Golden's work has appeared on eHow, USAToday.com, TheSpoof.com and his privately managed blogs, .modern Dislogic and Outdoors—Dixie Style.