Construction Equipment Rental Insurance: How & Where to Get Coverage

Contractors and construction businesses that rent equipment should consider getting construction equipment rental insurance. This type of insurance covers the cost of replacing rented tools and equipment if they get damaged or stolen. 

Learn what construction equipment rental insurance covers, how much it costs and who can benefit from this kind of coverage.

What does construction equipment rental insurance cover?

Construction equipment rental insurance covers tools and equipment that are rented from a rental company. It pays to repair or replace items that get damaged by covered peril, like theft, vandalism and natural disasters.

Most tool rental companies offer insurance as an optional add-on to a rental contract. However, this type of policy can also be purchased separately from an insurance provider. Coverage is available on a short-term basis or as a permanent policy.

It’s important to point out that equipment rental insurance does not cover maintenance issues, misuse, or abuse of the equipment. Any damages caused by lack of maintenance or abuse are the responsibility of the customer. 

Equipment Rental Insurance vs. General Liability Insurance

General liability insurance covers damage caused by tools and equipment that a business owns or rents. It doesn’t cover damage to the actual tools or equipment that are rented. 

For example, imagine that a residential contractor rents an excavator to build an in-ground hot tub, and they accidentally back the excavator into the side of the house. Not only does it damage a portion of the siding, but it also damages the excavator.

In this case, the contractor’s general liability insurance policy would pay to repair the homeowner’s damaged siding, but it wouldn’t cover damage to the excavator. A construction equipment rental insurance policy would pay to fix the machine.

In addition, some tools and equipment might not qualify for coverage under a general liability policy. For instance, a work truck could be considered business equipment but business-owned and leased vehicles are only covered under commercial auto insurance. 

Equipment Rental Insurance vs. Damage Waivers

When a contractor rents construction tools or equipment, they have the option to add a damage waiver to their rental agreement. The damage waiver limits the contractor’s financial responsibility if their rented equipment comes back damaged or stolen.

If something happens to the rented tools or equipment, the customer is only required to pay a certain percentage of the cost of repairing or replacing the items. For example, a waiver might require the customer to pay 50% of the value of stolen equipment. 

A construction equipment rental insurance policy covers the full cost of repairing damaged items or replacing stolen equipment, minus any deductibles.

How much does equipment rental insurance cost?

The cost of equipment rental insurance depends on a few factors, including:

• Age of the equipment and its value
• Duration of the rental period
• Type of work being performed
• Deductible and coverage limits

Equipment rental insurance premiums are typically higher for heavy machinery and expensive equipment, like bobcats, cranes and bulldozers. Less valuable tools, like table saws and carpet installation tools, usually have lower premiums. 

Additionally, contractors will pay more for rental insurance if they need coverage over multiple months or years. Some insurance companies also offer short-term policies for week-long or month-long projects, which are cheaper.

Considering that construction equipment can be very expensive to rent, the price of insurance is quite inexpensive in comparison. Before purchasing equipment rental insurance, it’s a good idea to shop around and get multiple quotes to find the best policy at the lowest price. 

Why do contractors need equipment rental insurance?

Contractors who rent a lot of equipment have more exposure to risk if they don’t have equipment rental insurance. They are responsible if tools or equipment get damaged or stolen, which can lead to serious financial consequences. Having equipment rental insurance provides peace of mind in case something unexpected happens.

For contractors who rarely rent tools, the coverage offered by a rental company might be sufficient. In this case, a damage waiver could be cheaper than getting a standalone rental equipment insurance policy. 

For contractors who rent tools and equipment often, the rental company’s damage waiver may not offer enough protection. A separate equipment rental insurance policy could be a good investment, which covers all the items a business rents during the policy period.

Equipment rental insurance helps protect business assets.

Contractors may want to consider purchasing equipment rental insurance if they frequently rent tools and machinery. The comprehensive coverage provided can safeguard their operations against potential liabilities, and help projects proceed smoothly without the burden of unexpected costs. Shopping around for competitive quotes and consulting with an insurance broker can help contractors secure the best coverage that meets their business needs.

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