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A row of construction equipment for rent that needs construction equipment rental insurance


January 11, 2022

Do You Need Construction Equipment Rental Insurance?

No construction project would be possible without the right tools for the job – this means that construction equipment and tools are valuable physical assets.
For both construction companies and equipment lessors, the loss or damage of construction equipment result in delays and financial loss. Unfortunately, these valuable tools and equipment are also highly susceptible to the following:

  • Equipment theft – which is common enough to be considered a “billion-dollar crime”
  • Damage during transit or in storage
  • Vandalism by criminal elements in the vicinity

This is why it’s important to safeguard construction equipment with the right construction equipment rental insurance. This specialized type of insurance benefits both construction companies that rent equipment and businesses that lease the equipment to others.

In this guide, we cover construction equipment rental insurance, how to know if you need it for your business, and more. Let’s begin!

Different kinds of construction equipment that need construction equipment rental insurance

What is Construction Equipment Rental Insurance?

Construction equipment rental insurance is also referred to as just “construction equipment insurance.” This type of insurance provides coverage for both tools and equipment used in construction, whether the tools are owned, borrowed, or leased.

Construction equipment insurance covers repair or replacement costs when equipment and tools are damaged, vandalized, or stolen.

On top of repair and replacement costs, construction equipment rental insurance can also provide coverage for lost revenue due to the covered incident.

What Kind of Equipment & Tools Are Covered By Construction Equipment Insurance?

In the insurance world, the terms “tool: and “equipment” mean two different things. Construction tools are valued at less than $1000 while construction equipment is valued beyond $1000. A construction equipment rental insurance can provide coverage for both, depending on the needs of your business.

Do I Need Construction Equipment Rental Insurance

If you’re considering whether or not you need construction equipment rental insurance, here are a few key questions you can ask:

  1. Will equipment damage result in massive income loss or delays?
  2. Will repairs or replacement of construction equipment set your business back financially?
  3. Is there a high crime rate and/or numerous incidents of equipment theft in the area where you will be using construction equipment?
  4. Will you lease construction equipment in high-risk areas?
  5. Do you transport rented equipment from one location to another on a regular basis?

If you said yes to one or more of the above questions, then your business will benefit greatly from having construction equipment rental insurance.

Benefits of Having Construction Equipment Insurance

Another way to determine if your business needs construction equipment insurance is by considering these benefits it can give you:

1. Financial Protection for Repair/Replacement Costs

Owning construction equipment, even on regular days (i.e. days without accidents, theft, or vandalism), will still pile up regular maintenance costs. Furthermore, the equipment’s value depreciates over time and with every single use.

For the above reasons, most equipment lessors can’t afford to have sudden expenses from accidents, theft, or vandalism towards their equipment. Furthermore, in case the lessee or the company that borrowed the equipment isn’t liable for equipment damage, equipment lessors will bear the full brunt of the loss – that is, if they’re not properly insured.

On the other hand, if the lessee (the entity who rented the equipment for use) is found liable for direct damage or negligence leading to equipment theft, then this business can be faced with steep repair or replacement costs.

This section makes it perfectly clear how both equipment lessors and lessees can benefit greatly with the right construction equipment rental insurance.

2. Financial Protection for Lost Rental Income

This benefit is especially for construction equipment lessors or businesses that allow construction businesses to rent their equipment. Customized construction equipment rental insurance can cover lost rental income when damaged/stolen/vandalized equipment is still under repair or is still in the process of being replaced.

 An umbrella over a money to symbolize the financial protection given by construction equipment rental insurance

3. It Picks Up Where Property Insurance Ends

If you have commercial property insurance, you are likely to have coverage for machinery and equipment that are in a fixed location – along with coverage for the structure/workplace itself and coverage for lost income due to property damage.

However, commercial property insurance does not cover mobile equipment that is regularly transferred to different locations. This is why most mobile construction equipment, such as excavators, backhoes, bulldozers, and so on, are not covered by commercial property insurance. In extension, rented mobile equipment is also not included.

4. It Picks Up Where Installation & Tool Floater Insurance Ends

If you have installation and tool floater insurance, you may already have coverage for some tools – along with coverage for uninstalled materials and fixtures. Installation and tool floater insurance will cover repair/replacement costs in the event that these items are damaged, stolen, or vandalized. In many ways, this type of insurance closely resembles construction equipment insurance.

The main difference, however, is that this type of insurance is not designed for rented or leased equipment. In fact, this type of insurance will likely exclude expensive equipment.

5. It Picks Up Where Builder’s Risk Insurance Ends

Along with covering a structure under construction, builder’s risk insurance can cover tools and equipment as well – however, this depends on the policy you have in place. Commonly builders’ risk insurance will exclude the more expensive equipment like excavators and bulldozers. It is also common to find builders’ risk insurance plans that exclude all tools and equipment.

Personalized Construction Equipment Rental Insurance For Your Business

In this guide, we talked all about construction equipment rental insurance, what it covers, and how this type of insurance can serve your business – whether you rent construction equipment or lease equipment to another business.

If you want to experience the full benefits of construction equipment rental insurance, we’re here to help. Contractors Insurance is an award-winning insurance brokerage firm that specializes in personalized insurance for contractors, tradespeople, and professionals.

Our dedicated team can put together a construction equipment rental insurance plan that fits your business’s needs perfectly. Furthermore, we will help you get the best premiums and provide assistance with all your insurance needs in the future. We offer the most hassle-free business insurance yet.

Get started today! Reach out to our friendly team or request a FREE quote.


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