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Leasing out equipment? Call your insurance agent first

W Joel Baker Headshot
Updated Jul 26, 2022

If you have trucks and/or trailers sitting in the parking lot and you’d like them to generate some revenue to help pay the bills by leasing them to a third-party company or an independent owner-operator, you’d be wise to contact your insurance agent first. To clarify, I’m not talking here about truck/fleet owners utilizing lease-purchase agreements with drivers, rather equipment lease agreements with independent third-party companies or individuals who assume the responsibility for the safe operation of the equipment.

Take for example one of my customers. They have one truck, and when they started the business, they had one trailer. When that initial trailer suffered a mechanical issue, there was an unexpectedly long period of downtime waiting for necessary repair parts. To minimize the loss of revenue, the customer elected to purchase a second trailer and remove the initial trailer from the policy. Several months later, that trailer had finally received the repair it needed -- the owner contacted me and wanted to place the repaired initial trailer back onto the policy.

They informed me they were leasing the trailer to a third party, and they wanted the trailer to be insured while in the third party’s possession.

I had the unfortunate obligation to inform them that if they leased out any equipment to a third party, the leased equipment would not be covered while in the “care, custody and control” of that third party. Additionally, all the insurance companies I have access to (10-plus) would not offer the coverage they sought. Insurance that provides coverage for our equipment while it is leased out is hard to come by.

[Related: Confronting a cost crisis: 'What do I do now to stay in business?']

The best guidance I've ever received for insurance came from an underwriter. It is especially relevant if we want to insure equipment we lease to a third party. He said: "Usually, you can find insurance for anything if price is not an object. So I am not saying you can’t, just I wouldn’t know where it would be."

Bottom line is if/when we locate an insurance company who will offer us a quote for equipment we want to lease out, it’s almost a given that the quote will be cost-prohibitive for most truck owners and especially for independent owner-operators or small fleets.

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