Businessmen and construction managers decide to rent instead of purchasing equipment to cut costs. Insurance is among the costs that are eliminated when one rents equipment. However, this makes a lessee vulnerable to losses by reason of the rental equipment. Damage and theft of the property rented during the leasing period are examples of losses that a lessee is responsible for.
To provide protection for lessees, equipment rental companies offer rental protection plans (RPP).
Rental Protection Plan Explained
Rental protection plan is more commonly called as damage waiver. It is an optional damage or accident coverage offered by rental companies. In simple terms, a rental protection plan is the rental company’s waiver of its right to charge a lessee for damage or loss of the property rented.
Typically, rental agreements indicate that the customer, from the time of delivery, is responsible for the care and safekeeping of the rental equipment until the company retrieves it. So, the lessee is expected to exercise diligence in protecting the equipment from damage, loss, or theft. Therefore, the lessee will have to pay for the equipment in case of loss, damage, or theft during the leasing period.
By purchasing a rental protection plan from the company, the lessee is in effect availing of the company’s waiver of its rights. The rates vary from one rental company to another, but the average rate is 14% of the rental cost.
Is a Rental Protection Plan Similar to Insurance?
Although a rental protection plan possesses the basic characteristics of insurance, it is not insurance. It is a mere waiver of the rental company’s right to hold the lessee liable for the equipment. The difference is that rental companies are neither licensed nor regulated insurers, and unlike in insurance, there are no claims made.
What does a Rental Protection Plan Cover?
The risks and events covered by rental protection plans offered by companies greatly differ. Some only include damage and theft protection, while other protection plans cover more. Other events that may be covered are tire protection; rental liability while damage equipment is being repaired, weather damage, vandalism, fire protection, earthquake protection, etc. One thing rental companies have in common is that their RPPs do not cover damages that result from intentional abuse of the equipment.
How does RPP Work?
If you purchased an RPP and a covered loss occurred, your liability is minimized. For example, the RPP indicates a $500 deductible on equipment that has under $100,000 replacement cost. The equipment you rented was stolen and it has $60,000 replacement cost. Instead of paying $60,000, you only pay the $500 deductible. Even if you add the RPP purchase price with the deductible, you still end up paying less.
Purchasing a rental protection plan is worth considering to minimize possible losses from unforeseeable events. After all, accidents prey on even the most prudent man.
Written by Lindsey Rentals. Lindsey Rentals offers the best service and equipment rental in Columbia, MO.