I rented a mini-excavator from Home Depot. I declined their “Damage Protection” because I thought my business insurance covered it. I flipped the excavator on a slope. Home Depot sent me a bill for $35,000. My insurance agent said, “We cover your tools, not rented vehicles.”

Key Takeaways

GL Does Not Cover Rented Equipment: Just like borrowed tools, rented equipment is in your “Care, Custody, Control.” General Liability excludes damage to it.
Hired Auto vs. Rented Equipment: If it has a license plate (dump truck), you need “Hired Auto Physical Damage.” If it’s mobile equipment (excavator), you need “Rented Equipment” coverage on your Inland Marine policy.
The Damage Waiver (LDW) is Worth It: The rental company’s waiver is expensive (15% of rental), but it is “no questions asked.” It doesn’t hit your claims history.
Certificate of Insurance (COI): Rental yards often ask for a COI. Just because you provided one doesn’t mean you are covered. It just proves you have Liability (if you hit someone). It doesn’t prove you have coverage for the machine itself.

The “Why” (The Trap): The Gap in Coverage

There are two distinct risks here:

Liability: You hit a car with the excavator. (Your GL covers this).
Physical Damage: You wreck the excavator. (Your GL excludes this).

Unless you have an Inland Marine policy with a specific line item for “Leased or Rented Equipment,” you have zero coverage for the machine itself.

The Investigation: “I Called Them”

I compared the costs of insuring a rental.

1. The Rental Yard Waiver (Home Depot / Sunbelt)

Cost: 15% of rental fee ($150 on a $1,000 rental).
Coverage: Covers theft, vandalism, and accidental damage. High deductible ($1,000+).
Pros: Easy. No impact on your own premiums.

2. Adding to Business Policy

Cost: ~ 100−100− 500/year to add “Rented Equipment” coverage.
Coverage: Covers up to a limit (e.g., $50,000).
Pros: Cheaper if you rent often.

3. Short-Term Equipment Insurance (J.T. Bates / verify)

Cost: Per-rental policies available online.
Pros: Good middle ground if you don’t want the annual policy but declined the yard waiver.

Comparison Table: Rental Protection

Feature	Rental Yard Waiver (LDW)	Your Inland Marine Policy	General Liability
Covers Damage to Machine	Yes	Yes (If endorsed)	No
Covers Theft of Machine	Yes	Yes	No
Deductible	High ( `1k−1k−` 5k)	Your Policy Ded. ($500)	N/A
Cost	High (Per rental)	Low (Annual)	N/A

Step-by-Step Action Plan

Check Your Policy NOW: Look for “Leased/Rented Equipment” on your Declarations page. If the limit is $0, you are self-insuring.
Rent Often? Endorse It: If you rent more than 3 times a year, call your agent and add $50k or $100k of Rented Equipment coverage. It pays for itself.
Rent Rarely? Buy the Waiver: If you rent once a year, just pay Home Depot the extra fee. It’s cleaner.
Inspect on Delivery: Take a video of the machine when it arrives. Rental yards are notorious for charging you for scratches that were already there.

FAQ

Q: Does my credit card cover rental equipment?
A: No. Amex/Visa cover rental cars (sedans/SUVs). They specifically exclude “trucks, pickups, and off-road equipment.”

Q: What if I hurt someone with the excavator?
A: Your General Liability covers the injury to the person. The Rental Waiver does not cover liability. You need both.

[IMAGE: Screenshot of a rental contract circling the “Loss Damage Waiver (LDW)” Accept/Decline box.]

Depreciation: “Actual Cash Value vs. Replacement Cost: Getting New Tools for Old.”

My shop was broken into. Thieves took my 5-year-old table saw, my compressor, and all my cordless tools. To replace them with new models would cost $8,000. The insurance check arrived for $3,200. They said, “We paid you the Actual Cash Value. Those tools were used.”

Key Takeaways

ACV is the Default: Most basic policies pay “Actual Cash Value” (ACV). This is “Replacement Cost minus Depreciation.” A 5-year-old drill is worth almost nothing on paper.
RCV is the Upgrade: You need “Replacement Cost Value” (RCV) coverage. This pays the cost to buy a new item of “like kind and quality,” regardless of how old the stolen one was.
The “Holdback”: Even with RCV, insurers often pay ACV first. You have to buy the new tools, submit the receipt, and then they send the rest of the money (the recoverable depreciation).
Obsolescence: If your old tool is no longer made, RCV pays for the “current equivalent model.” (e.g., Old 18V NiCad drill -> New 18V Lithium drill).

The “Why” (The Trap): Depreciation Math

Insurers use depreciation tables.

Power tools might depreciate at 20% per year.
After 5 years: 100% – (20% * 5) = 0% value (or a scrap value floor).

If you have an ACV policy, you are essentially insuring the Craigslist value of your tools, not the Home Depot price.

The Investigation: “I Called Them”

I compared payouts on a $1,000 saw (5 years old).

1. ACV Policy (Basic)

New Price: $1,200 (inflation).
Depreciation: 50%.
Payout: $600 minus 500deductible=∗∗500deductible=∗∗ 100 Check**.

2. RCV Policy (Premium)

New Price: $1,200.
Payout: $1,200 minus 500deductible=∗∗500deductible=∗∗ 700 Check**.

3. The “New for Old” Clause (Specialty)

Payout: Some carriers offer “Agreed Value” for scheduled items, paying exactly what you listed the value as, no questions asked.

Comparison Table: ACV vs. RCV

Feature	Actual Cash Value (ACV)	Replacement Cost (RCV)
Basis of Payment	Craigslist Value (Used)	Store Price (New)
Premium Cost	Lower	~10-15% Higher
Deductible Applies?	Yes	Yes
Best For	Old, cheap tools	New, expensive tools

Step-by-Step Action Plan

Check Your Dec Page: Look for “Valuation: Replacement Cost.” If it says “ACV,” call your agent immediately and upgrade. It costs pennies on the dollar.
Keep Receipts for New Tools: RCV claims go smoother if you can prove you bought it new.
Understand the Claim Process: Don’t panic when the first check is low. That’s the ACV check. Go buy the new tools, scan the receipt, and send it in to release the “Recoverable Depreciation.”
Update Your Limits: Inflation is real. If you insured your tools for $10k in 2020, replacing them in 2026 might cost $15k. Increase your total limit.

FAQ

Q: Can I upgrade to a better model?
A: Usually no. They pay for “like kind and quality.” If you want the upgraded model, you pay the difference out of pocket.

Q: Do they depreciate hand tools (hammers/wrenches)?
A: Usually, they bundle these as “Miscellaneous Tools” and apply a flat depreciation rate because they don’t have serial numbers.

[IMAGE: Graphic showing a check for $300 labeled “ACV” and a second check for $700 labeled “Recoverable Depreciation” appearing after a receipt is scanned.]