10 Tips for Better Equipment Rental Agreements
Franchise equipment dealers (FEDs) assume significant risk when leasing equipment to their various construction, agriculture, and forestry customers. Any theft or damage to the expensive pieces of machinery they rent out, like excavators and loaders, can really put a dent in their bottom line.
That’s why Alex Best, Value Creation Executive at ProSight Specialty Insurance, and Glenn Jacobs, Executive Vice President of Fairview Insurance Agency, got together to discuss what dealers can do to minimize risks at the contract stage. Through their deep industry expertise and partnership, Alex and Glenn know what proactive measures franchise equipment dealers can take to help safeguard their equipment—and their livelihood.
Here are their Top 10 Tips for minimizing risk:
- Do not lease equipment without a signed rental agreement. When you and your customer sign the agreement, it will outline the rights and responsibilities of each party with regard to the rented equipment.
- Always obtain legal review of the rental agreement. This will ensure that all terms and conditions meet appropriate state laws and that the proper clauses are in place, including any hold harmless or indemnity clause.
- Obtain a certificate of insurance (COI) from your customer that names your dealership as an additional insured and loss payee. Doing so helps protect you from liability, as well as damage or theft that may occur to your equipment during the rental period.
- Verify your customer’s insurance to confirm that the insurance provided on the COI meets the monetary coverages and requirements of your rental agreement.
- Confirm the limits of your property/inland marine insurance. Make sure your coverage adequately reflects the total value of your rented equipment—and that it applies to equipment when it’s both in transit and on site.
- Always double check phone orders prior to delivery. Any number of things can happen between the time a client orders a piece of equipment and the job begins, so it always makes sense to confirm the order before prepping equipment and taking it on the road.
- Deliver your equipment to an authorized representative who has been designated to accept delivery for your customer at the project location. Never drop off or leave your equipment unattended on a job site.
- Obtain a signature and two forms of identification from the person accepting delivery. It’s a good practice to ask for one photo ID, like a driver’s license, that you can visually check.
- Reiterate the terms of equipment usage. Remind your customers—verbally and in your written agreement—that they’re responsible for the equipment they rent and that they can’t re-rent or allow another party to use it, if that prohibition is included in the rental agreement.
- Attach the operator’s manual to every piece of equipment. Explain basic operating procedures to your customer, but make it clear that OSHA requirements say they are responsible for providing adequate equipment training as the “Employer.” You may want to include this wording in your rental agreement, too.
From forklifts to backhoes, your equipment is your business. So give your dealership the tools it needs to prosper—starting with solid rental agreements that have the proper protections in place. Contact Alex Best, Value Creation Executive at ProSight, to get started.