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UK Business Finance - Do I Need To Insure My Equipment?

Guest post by: Al Shea

Article Overview: If you take out a finance lease for business equipqment, you normally need to insure the equipment as part of the lease, this article explains why.

UK Business Finance - Do I Need To Insure My Equipment?

Business finance agreements for any type of equipment will typically require that you have insurance onthe equipment you are leasing. The reason for this is because you are not the legal owner of the equipment until you have finished paying off the loan in full and title has been passed/sold to you. Until this time, the title of the equipment stays with the funder who is leasing you this equipment. Rightfully, you need to insure this equipment to cover you against circumstances such as theft, damage, fire, etc so that in the event of any of these you can claim on your insurance for it to be repaired or replaced. If you do not have insurance, firstly you are breaking the terms of the lease, and secondly, you'll still need to make your lease payments and you won't have any equipment to use. So it is both required and the sensible thing to do having insurance on any assets you are leasing. Where you need to be careful:

Many funders will require you to prove that you have taken insurance on the equipment within an agreed timeframe (30 days normally), this can by supplied to them via fax or post. If you don't supply this proof to them, the funder has a legal right to take insurance out on your behalf (to cover themselves) and add it to your existing payments. This can often be expensive, obviously the funder doesn't really care about getting you the cheapest insurance deal out there, they just want their asset insured. So it is very important you have insurance to prevent this from happening.

Very often you will already be covered on your existing commercial insurance, so you may not need to take out another policy, just simply add this asset to your existing policy by calling your insurance broker. Even if it costs a few pounds more, it will still be cheaper than taking out a new policy or letting the funder insure it themselves on your behalf.

So to summarise, always ensure you have your financed equipment insured comprehensively, inform the funder well within their timeframe of your insurance, and add the equipment to your existing commercial insurance policy to make it the most cost-effective.

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Article Tags: business finance, cheap insurance, commercial insurance, finance lease, insure business assets, uk business



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