We’ve put together a basic insurance overview when purchasing equipment through finance.
Over the years of organising finance across Australia, the EXEQ Finance team has witnessed events from customers losing equipment in a fire, to having equipment being stolen off the street. We want to make sure our customers are aware they need to be protected, so they can replace equipment lost if an unfortunate situation occurs.
Equipment being financed generally must carry insurance, which is stipulated under the lender’s fine print. Often, businesses have policies that cover all assets, such as a fleet policy or farm policy, in case there is an unexpected event that causes the equipment to be damaged or lost. Other businesses may opt for individual policies for each unit of equipment. Either strategy is acceptable and should be considered to best suit the business.
The purchasing process:
Most of the time, our customers simply need to contact their insurance agent and provide details of the purchase. Their agent will update the policy accordingly and send verification to our team. Often lenders require proof of insurance documentation, such as a certificate of currency before the loan can settle.
The certificate of currency must clearly state the following:
- The insured’s name (should match the name on the loan documentation).
- The lender’s business name, usually termed “interested party”.
- The equipment details, amount of cover (loan amount as a minimum), expiration date of the policy, the policy number, and the insurance underwriter.
- Whether any hire arrangements are in place for the equipment.
During ownership:
Within the terms and conditions of a loan, generally insurance is required whilst the equipment is under finance. Having the correct details of the equipment and sums insured for the current replacement value of the equipment is crucial. We encourage regular reviews of asset values and details, to ensure you are adequately insured. Having incorrect insured values could result in any claim being adjusted due to underinsurance, meaning you’ve paid for less insurance than what you need to replace your asset.
End of ownership:
If the equipment is sold, our customer will need to contact their insurance adviser to advise the equipment has been sold and instruct the equipment be removed from their insurance policy.
As a side note, EXEQ Finance can provide Insurance Premium Funding, whereby the insurance premium is financed under a fixed rate loan for the duration of the premium term.
Organising finance should be a well-informed and calculated process. By avoiding these common mistakes, you’ll position yourself for a smoother and more favourable financing experience. Interested in learning more? With EXEQ Finance, we’re here to help you through the process every step of the way. Contact us today to discover how we can help you get the finance to buy the equipment of your dreams!
Call us on 0428 457 517 or submit an enquiry – we’d love to help!