3 Important Things to Check Before Signing Your Equipment Financing Contract: Part 1- Equipment Insu
In today's world, speed is everything. For the small business owner, that is doubly true. Small business owners often balance the operations, planning, supervising, financial decision making and a million other things in their day. To help small businesses make sure they understand their equipment financing, we created a quick list of 3 things you must check before signing an equipment finance agreement or equipment lease. Today we will talk about Equipment Insurance.
1. Insurance - Before signing your agreement you should consider a few things about the equipment insurance. Does the agreement require that you obtain insurance? Most equipment finance companies will require the equipment is insured. They may agree to finance the equipment now but require that you obtain insurance within 30 days. They also may require it at funding. Any titled vehicle that is required by your state to be insured will almost certainly have to have that policy in effect prior to funding.
Most companies will require that you purchase their insurance plan if you do not provide your own. These policeies are often provided by 3rd parties but can sometimes be "self-insured" by the equipment leasing or equipment funding company. Normally, you will be able to obtain cheaper equipment insurance on your own. If you start out with the funding company's insurance you can usually switch to a cheaper policy during the term.
Lastly, Make sure you realize that they are requiring property covevage. This is different than general or commercial liability coverage. While liability coverage will cover you in the case of damage you cause to another's property or personage, the property coverage covers you in the event that the equipment is stolen, damaged in a fire, or any other unforeseen event. In order to know if you are covered contact your insurance agent.
Equiment insurance is an important component to consider as it will add some cost to the monthly expense of owning the equipment. It is also important to know you will not be held responsible personally for repaying the equipment in the event of a disaster.