Contracting firms use a variety of equipment, some of which they own and other items that they rent. It’s important for contractors to insure both the equipment they own, and the equipment they rent or lease. If you have a contracting business in Massachusetts, here’s why its contractors insurance policy should include coverage for rented or leased equipment -- along with how to procure this coverage.

Should My Contracting Firm Include Coverage for Rented Equipment in Its Contractors Insurance Policy?

For Contractors’ Own Equipment: Personal Property Property and Equipment Breakdown Coverages

Contractors insurance policies frequently include at least two coverages that help protect equipment contracting businesses actually own. These coverages are business personal property coverage and equipment breakdown coverage.

Business personal property coverage generally protects equipment from perils such as fire, theft, vandalism, wind, etc. Should equipment be destroyed or damaged by a covered peril, business personal property coverage will usually provide compensation for the equipment according to the coverage’s terms, conditions and limits. (Exactly what perils the business personal property coverage in a contractor’s policy covers can vary and are detailed in the policy’s terms and conditions.

Equipment breakdown coverage normally helps protect equipment from potential malfunctions that interrupt business operations. Should a piece of equipment break down due to a covered incident, this coverage will usually help pay to have the equipment repaired or replaced. Depending on a policy’s terms and conditions, covered incidents may include mechanical failure, human error or a variety of other potential causes.

For Mistakes Contractors Make: Contractors Liability Insurance Coverage

Contractors liability insurance coverage provides a host of protections. One of those protections is frequently coverage for certain accidents that injury non-employees while a contractor is using equipment. In most cases, contractors liability coverage will cover qualifying accidents that occur while either owned or rented equipment is being used.

(Accidents that result in employees’ being injured are normally covered by workers compensation insurance, which usually must be purchased separately from a contractors policy.)

For Perils That Damage Rented Equipment: The Renting Company’s Personal Property Coverage

Most companies that rent contracting equipment carry property insurance policies that include business personal property coverage for the items they rent. This coverage generally provides protection against the perils that renting companies are concerned about, and it’s usually set up to cover the company’s equipment wherever it is -- including while it’s being rented.

Thus, contractors normally don’t have to worry about insuring rented or leased equipment against perils like wind, fire or theft. In the uncommon situation where a contractor does need to provide insurance against these perils, their responsibility is usually made clear in the rental agreement.

For Damage to Rented Equipment: Leased or Rented Equipment Coverage

While a renting company usually insures their equipment against common perils, they typically don’t carry coverage for damage that’s caused by a contracting firm. If a contractor is responsible for damage sustained by a piece of leased or rented equipment, they may be held financially liable by the renting company.

Leased or rented equipment coverage is a specialized form of liability coverage that typically offers protection for this specific risk. If a contractor damages rented equipment in a covered incident, this coverage might help pay to have the rented equipment repaired or replaced.

Because repairing or replacing contracting equipment can be expensive, leased or rented equipment coverage is a protection that your Massachusetts contracting firm will likely want in its contractors policy.

Get Contractors Insurance That Has the Coverages Your Massachusetts Firm Needs

For help finding a contractors insurance policy that has the business personal property, contractors liability insurance, and leased and rented equipment coverages that your Massachusetts contracting firm needs, contact an independent insurance agent. An independent agent will be able to make coverage recommendations based on your business’ particular risk exposure, and they can help you find a contractors policy that provides the coverages your business needs.