Equipment finance insurance

Leasing or financing business equipment and vehicles instead of paying for them with valuable working capital makes good business sense.

Page written by Chris Godfrey. Last reviewed on February 28, 2026. Next review due October 1, 2027.

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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.

What is equipment finance insurance?

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.

The different types of equipment finance insurance:

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:

Equipment physical damage programs

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:

Full-service automated program – cover that is automatically added to any agreement.
Self-service program – allows the customer (lessee) to instantly enroll in an EPD program.
Point of Sale protection – offered at finance origination by the lender.
Machine tool operator error program – covers physical damage to a machine tool by the borrower or lessee.
Rental loss damage waiver – general purpose protection for equipment out on rental or lease.
Repossession cover – protects the lessor from loss in case of repossession of the equipment or vehicle.

Commercial Vehicle Program

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.

Risk Management Programs for Lease Portfolios

These are specialized insurance products to protect the lessors (owners) of the assets they place out on lease or rental. They include:

Equipment Residual Value Insurance – this allows lessors to account for operating leases as finance leases to accelerate earnings and enhance financial gains.
Stipulated Loss Gap Coverage – insures the exposure between the new book value and the stipulated loss value when lessors buy or sell a lease. Eliminates the need for lessors to set reserves for exposure.
Contingent & Excess Liability Insurance – protects the insured in the event of an accident lawsuit involving their leased equipment.

What documentation is required?

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:

Your business details
Details of the equipment being financed or leased, including its intended location and usage, and any serial/registration numbers.
Copy of the finance/lease agreement, clearing showing contract number.
Odometer (mileage) reading if a vehicle is being leased or financed.
Value of the equipment.
Start and end date of the agreement.

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.

Get started with Swoop's business funding platform

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. US 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 equipment 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.

Written by

Chris Godfrey

Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Wells Fargo Bank, Visa, Experian, Ebay, Flywire, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of US consumer and business finance.

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