What is equipment leasing insurance and do you need it as a business owner? This type of insurance policy can cover your work tools and other related equipment. In this article, you will find out how you can use this insurance policy to protect the equipment that matters the most to you.
What is Small Business Equipment Leasing Insurance?
It is also known as tools and equipment insurance. The coverage covers the cost of replacing and repairing damaged work tools. This includes tools your business uses at its office and on clients’ projects.
As a business owner, you know that your equipment is the “lifeblood of the business.” Those in the construction industry feel it the most when their tools are damaged or become inefficient for further work.
How Does Equipment Leasing Insurance Work?
The coverage works by protecting the financial loss or additional expenses arising from damaged, stolen, or lost equipment.
Your business needs this to also cover the equipment when it is in transit to where it is needed.
One of the reasons why it is important is because your business will make additional expenses if any of its tools are lost or stolen. It would mean making additional expenses to repair or replace these items.
You may be able to shelve those additional costs by using tools and equipment insurance to cover these items.
The policy is also relevant for business owners looking to protect other gear used in the line of duty.
What Does Equipment Leasing Insurance Cover?
What does the insurance cover and do you need it? Typically, equipment leasing insurance covers the repair or replacement of tools leased to your business. This is exclusive to tools and equipment that your business doesn’t own. Rather, the tools were leased or given to your business on a temporal use basis for a fee.
If the tools are lost or damaged, your business will incur additional charges to replace the tools.
Your small business equipment leasing insurance also covers clothing used by your employees.
What Isn’t Covered by Equipment Leasing Insurance?
This insurance policy is exclusive to leased tools. Therefore, equipment owned by your business wouldn’t be covered.
Also, you wouldn’t be able to use the policy to cover wear and tear on business tools. Damages to properties due to corrosion or carelessness may not be covered. You want to speak with your tools and equipment insurance provider to find out the extent of the coverage.
1. “Expired” Tools
The equipment leasing insurance may be unable to cover tools and equipment that are past “useful life.” For example, if the tools have been used for many years, the likelihood of damage is possible.
So, your insurance provider may not be convinced to offer you the coverage.
2. Non-Insured Damage
Damages that weren’t insured from the time the policy became active may not be covered.
3. Exclusivity
Depending on the equipment lease broker, you may be required to niche down. Some insurance providers may restrict the equipment leasing insurance to only “movable tools and equipment.”
Thus, the coverage may not cover tools that are “static” or only used in the factory or business premises.
Do I Need Equipment Leasing Insurance?
Business owners that take a lease on equipment require equipment leasing insurance. For example, you have a project to handle and you don’t want to buy new tools. You can simply take equipment leasing insurance to protect the equipment throughout the project.
The following categories of business owners also need the coverage:
- Welders
- Arborists
- Plumbers
- Carpenters
- Electricians
- Painters
Equipment leasing insurance is ideal for business owners that deal more with “handwork.” You can purchase the policy if you have employees working from a stationary workplace, such as an office or factory.
How Does Leasing Equipment Work?
Equipment leasing is the “renting” of equipment rather than making an outright purchase of the same. It permits you to agree with the lessor or owner of the equipment.
The details of the agreement typically include:
- The duration of the lease.
- Equipment leased to you.
- How much you are expected to pay for the lease (either weekly or monthly).
Why Leasing Equipment is Better than Buying
What are the equipment lease insurance requirements that make it ideal for you to lease instead of making an outright purchase?
Here are some of the reasons why you should lease equipment for your business:
1. Scaling Options
Your business deals with varieties of projects. As such, it needs to have access to multiple tools and equipment. While you may be unable to buy them at once, you can take them on lease.
With this option, you can upgrade to more advanced tools for your business. The beautiful thing about it is that you can also take these advanced tools on lease.
2. Affordable
You don’t have to break a bank to buy equipment for your business. However, you can use the more affordable option, which is to take these tools on lease.
Through this process, you can make a lower down payment to acquire the equipment your business needs.
3. Multiple Financing Options
When it comes to equipment leasing vs financing,you have a lot of options to choose from. Finance can be obtained from equipment dealers, banks, equipment distributors, and leasing companies.
How Much Does Equipment Insurance Cost?
What will it cost you to take tools and equipment on a lease? The cost of doing these so depends on the following factors:
1. Duration of Use
How long do you anticipate using the equipment? It is best if you intend to take the tools on lease for a couple of months – or even some years.
2. Your Budget
At the end of the day, the amount you set out to spend plays an important role in the leasing process. How much are you willing to spend to maintain the tools lease every month? Define your budget and find insurance for equipment leasing companies that fall into that range.
Conclusion
Taking equipment on lease is a strategic way to bolster your business operations while cutting down on expenses. Make sure to check with the best equipment lease insurance companies to get the best quotations.
