RENTAL • Market Opportunities
Proper Rental Insurance Protects Dealership
Liability and property damage are two major concerns with a rental business. The proper insurance can reduce those risks and protect your business, says Alastair Jones, vice president of sales and marketing for ARA Insurance Services, a compa- ny of the American Rental Assn. “When you rent equipment, you don’t really know how customers are going to use it. Equipment could potentially be dead- ly,” says Jones. He says the insurance carried by dealerships may not explicitly exclude rental, but often the use of the equipment off-site by some- one other than an employee has not been figured into the rate and coverage. “If there’s a claim, the insurance com- pany could decline the claim. Or, they could pay the claim, but potentially can- cel your policy.”
continued from pg 8 “The first strategy for anyone
Alastair Jones is vice president of sales and marketing for ARA Insurance Services.
considering rental is to be able to answer the question, ‘What’s the market in my area?’ Talk to your cus- tomers to understand their needs, wants and desires,” says Hubbell. He suggests using the website
www.rentalhq.com. The site allows renters to enter the kind of equip- ment they’re looking for and their location. Dealers can use it to under- stand the competition in their area. ARA also just released its Equipment Rental Penetration Index via its Rental Market Monitor. The tool is available to members and helps com- panies measure the rental potential in their area.
Jones advises dealers follow these steps when considering adding a rental division. 1. Notify your insurance company about adding rental or any change in busi- ness operations. Based on the feedback, pursue additional insurance coverage to include equipment that may be rented. 2. Make sure your rental contracts have been reviewed by a lawyer who is familiar with the state’s laws. 3. Talk with an expert or trusted dealer about damage waivers. A damage waiver is a fee the customer pays at the time of rental that may limit their respon- sibility to pay for damaged equipment. Waivers are added to a fund, which the dealer uses for rental equipment repairs. Those dealers renting to contractors have another insurance option. A con- tractor’s business insurance may cover rental equipment. Dealers can request a copy of that insurance certificate and include it as part of the rental contract. Jones offers one other bit of busi- ness advice. Talk with your lawyer or accountant if you’re considering adding a rental division. They may suggest set- ting up a limited liability corporation or other legal arrangement to protect your equipment business. Check out this resource of insurance
terms to help you better understand your policies,
http://www.ararental.org/ ARAInsurance/
InsuranceGlossary.aspx.
Sell to Your Strengths Dealers face tough competition from rental-only stores, both those that are independently owned and nationwide chains. To compete, dealers need to understand and mar- ket their dealerships’ strengths. “Understand what you’re good at. Be committed to what you’re good at. Don’t try to be all things rental,” says Heath Watton, man- ager of Southeastern Equipment’s Cambridge, Ohio, location. Southeastern Equipment has been renting equipment since it start- ed business in 1957 and the com- pany now has 18 locations in Ohio, Indiana, Kentucky and Michigan. It says it is the largest privately owned Case Construction dealer in the world and its main customer segments include residential and commercial construction compa- nies, utility contractors, landscap- ers, farmers and municipalities. Its main rental lines include Case Construction, Kobelco, Terex, Bomag and JLG.
Watton says they don’t cross over into the homeowner base for rental, especially because the larger equip- ment they rent requires operator knowledge and experience. “I refer homeowner business to the smaller rental houses. It doesn’t make sense for us and I would rather
12 RURAL LIFESTYLE DEALER SUMMER 2013 turn it away,” Watton says. Kyle Kresse, who does inside sales
for Farmers Implement, says his com- pany has been offering rental equip- ment since the 1990s. However, it’s a very small part of the business, maybe 1% of revenues. Rental used to pro- vide a larger share when homebuild- ing was at its height in the nearby metro area of Milwaukee. This Case dealership has locations in Allenton and Columbus, Wis.
They still rent to some con- tractors as well as farmers and rural lifestylers. Rental equipment includes Case IH compact tractors and attachments, Gehl skid and track loaders, CEAttachments and Lowe Manufacturing augers, auger bits, grap- ple buckets and trenchers.
“We offer rental as more of a con- venience to our customers,” Kresse says. “It helps out with our customer relationships. Customers appreci- ate having a wide variety of attach- ments to use when they need it. It helps them get those projects done that they may only do once a year, so they can’t justify buying a piece of equipment like an auger or concrete breaker. They can come down here and pick it up and get the job done.” Vajgrt of Home Rental says vari- ety is what helps him win customers. He has more than 1,200 categories of items to rent. Construction equipment includes asphalt and concrete equip- ment, excavators, skid steers, tractors and attachments and trenchers. Do-it- yourself equipment includes aerators, augers, blowers, chipper/shredders, snow removal equipment, stump grind- ers and more. Party rental includes audio/visual equipment, food prepara- tion equipment and tent accessories. He even rents animal traps, extension cords and costumes.
Vajgrt says customers feel more comfortable renting recognizable brands so he carries high-profile equipment such as Bobcat, Kubota, Toro, Vermeer and Woods Equipment. “Name recognition is absolutely huge. I’ve bought ‘off-breed’ equip- ment in the past and customers tend- ed to shy away from it,” Vajgrt says.
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