Every equipment rental requires an insurance policy to protect the renter and equipment owner in the event of an accident. In an article from February 2020, Fortune Business Insights reported that the construction equipment rental industry stood at 98.21 billion USD in 2018. They then projected that it would reach 145.22 billion by 2026. Though it is not specified what percentage of this is directly due to short-term rentals, the sheer amount of industry growth should be noticed.
Short-term rental equipment insurance is an insurance policy available to equipment renters. Premiums for short-term rental insurance are pro-rated for the duration of the rental period, or a minimum coverage period. This type of insurance makes equipment rental possible for construction companies that for one reason or another do not have a property insurance policy that covers rented equipment and cannot produce a certificate of insurance. Or, maybe they do not have a need for consistent rental equipment coverage and want to avoid paying premiums all year for equipment they only need to use for a short time. In these instances, short-term rental insurance can be the solution that protects the renter and dealer from loss due to equipment damage.
After purchasing short-term rental equipment insurance, the agent should provide you with some proof of insurance so that you can rent equipment.
Coverage options include:
Both of these options offer protection for equipment in different ways. An equipment dealer may offer an insurance-backed damage waiver with wide coverage, or may choose to provide a self-funded LDW or FTV with limited protections to rental customers. Some dealers simply require a COI from all rental customers. The problem this can create for rental customers is that not all dealers offer a damage waiver, and not all rental customers can produce a COI. For renters who do not have or need a business insurance policy for rental equipment, but definitely need to use rental equipment for certain jobs, short-term rental equipment insurance bridges the gap.
[Related: When Can I use Rental Shield?]
The truth is, it depends on which company is providing the coverage. All underwriters may write something different, as you likely have already experienced. Some coverage will include physical damage like collision, falling objects, fire, flood, overturns, theft and vandalism. Some will only cover what a standard damage waiver will cover: fire, theft, and vandalism.
If you’re looking for good coverage and peace of mind, you might consider a policy that has broader coverage, especially if the project is high risk to equipment or you need to have predictable costs for a project. Broader coverage may cost more in premiums, but you will know the premium and the cost of any deductible up front. Less coverage or fewer named perils means there’s a higher chance that damage to equipment will not be covered. In those cases, the renter may end up paying out of pocket for damages to equipment.
It’s also important to know that physical damage insurance typically does not cover liability. A separate liability policy would need to be in place in order to protect the renter from damages that result in bodily harm, or damages to someone’s building or property.
A helpful list of what to collect in order to make the best decision for your business is in the section below, Cost of Short-Term Rental Equipment Insurance.
There are several factors that influence the cost of short-term rental insurance, such as:
The best way to comparatively shop short-term rental equipment insurance is to obtain a few quotes. Make sure to collect information on:
While this doesn’t give a specific dollar amount, we hope that this helps you better understand why each quote is handled on a case-by-case basis.
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