Borrowed equipment – A farmer’s most common coverage gap

Do you ever borrow a tractor from your neighbor? Or are you using a skid steer that belongs to a farmer down the road? Check your insurance policy. Borrowed equipment is one of the most common coverage gaps in farm and agricultural policies. 

Most farm and agribusiness policies have limited coverage of $25,000 or less for “borrowed equipment.” That’s fine if you accidentally crash your neighbor’s hay wagon, but it won’t cover a tractor, much less a $250,000 harvester. 

Consider the three Cs
Borrowed equipment, in policy terms, could be any items in your “care, custody, or control” as opposed to things you own. Any one of those three factors could trigger an exclusion, which means a lack of liability coverage. These “three Cs” include items you borrow, things you store for a neighbor, and equipment you rent.

Let’s assume something happened and you did wreck your neighbor’s tractor. Your neighbor probably has insurance, so their carrier will likely pay for the damage…and then their insurance company will pursue you for the loss.

Take action
If you borrow farm equipment from friends and neighbors, talk to your insurance agent about this common exposure. Many companies, including SECURA, offer several options for these short-term coverage gaps at an affordable price. Coverage options up to $250,000 aren’t uncommon.  

Whether you borrow equipment on a handshake or arrange a more formal rental agreement — the base policy limit might not be enough.

Call your agent and discuss your options for insurance limits. It’s possible your agent has already built in extra coverage…but maybe not. Find out for sure. It’s the neighborly thing to do.