A rental store rented a backhoe to a local contractor who had a job to complete at an industrial complex. Two days after the equipment was rented out, the rental store received a phone call from the contractor, who said the backhoe had been stolen overnight from the parking lot of the job site. The contractor had the keys to the equipment, but thieves still managed to take the backhoe. 

The police were notified of the theft and a claim was turned in to the rental store’s and contractor’s insurance carriers. No suspects or witnesses turned up in the investigation and the contractor’s insurance was hesitant to pay for the stolen equipment. The rental store pursued the claim through its own insurance and was paid for the replacement cost of the equipment, minus its deductible. 

The rental store’s insurance company then pursued the contractor’s insurance company for payment according to the provisions of the signed rental contract and was successful in collecting the actual cash value of the backhoe. Most insurance policies only cover actual cash value and not replacement cost. The rental store was reimbursed a pro-rata portion of its deductible, which came to 85 percent. 

Remember to get rental contracts signed for every rental and to ask customers about insurance coverage they may have to cover your equipment, especially commercial customers.