Leasing or financing business equipment and vehicles instead of paying for them with valuable working capital makes good business sense.
However, what happens if the equipment is lost, damaged or stolen during the lease/loan period? Who is liable for the financial loss? Equipment finance insurance has been designed to solve this tricky problem and take the worry out of borrowing or leasing the equipment your business needs. All it takes is a simple monthly, quarterly or annual premium to protect lessors, lenders, lessees, and borrowers from financial, legal, or compliance jeopardy.
Equipment finance insurance, (also called commercial lease insurance or equipment rental insurance), protects the lessor (equipment provider) and the lessee (you) from financial, legal and compliance liability when using leased equipment and vehicles. Equipment finance insurance may be included in the lease or finance agreement as part of a package deal, or it may be up to the lessee to obtain cover that protects all parties. In most finance and lease agreements, insurance cover is a legal obligation. The lessee always pays the insurance premium.
Equipment finance insurance is used to protect the lessor, the lessee, and third parties. Depending on the equipment or vehicle that is being leased or financed, the type of insurance required will vary. The main types of equipment finance insurance are:
Available for finance (instalment loan), lease, or straight rental agreements, Equipment Physical Damage programs (EPD) are the most common form of equipment finance insurance. EPDs protect against damage or loss to the equipment or vehicle during the contract period. The various EPD programs include:
This is insurance that protects the insured against uninsured physical loss or damage to financed commercial-titled vehicles. The policy usually covers collision and comprehensive losses but does not provide liability coverage.
These are specialized insurance products to protect the lessors (owners) of the assets they place out on lease or rental. They include:
To obtain equipment finance insurance, (if not automatically provided by the lessor/lender), you will typically need to provide the following information to the insurer:
Once insurance has been purchased, the insurer must send a copy of the certificate of insurance to the lessor/lender. Make sure the lessor/lender’s business name is also on the insurance documents (ex: Global Bank & Trust), and they are included as a beneficiary.
Equipment finance insurance is a specialist area with differing rules of application and requiring deep knowledge of many business sectors from the lender and insurer. UK SMEs seeking insurance or funding may find themselves forever searching and making applications to lenders and insurers without success. The delays this can create could cause them to lose revenue and leave their business vulnerable to competition. Instead, working with a broker, who can access equipment finance insurance, or commercial asset loans and leases, from a wide range of lenders and insurers is a better way to go. No more cold calls and endless demands for information, just tell us what you need and leave the rest to us.
Register with Swoop to find the best rates, the best terms and the best equipment finance insurance and commercial equipment leasing today.
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