Party Equipment Rentals insurance

Organizing special events for family celebrations, company product launches, county fairs and so many other kinds of gatherings has become a fast-growing business sector, as people have come to realise that getting professional help for these unique occasions will guarantee their success.

For the suppliers of these goods and services, party equipment rental insurance is a must-have protection because of the many risks there are of property damage and liability claims. Without proper insurance, a party organizer may have to pay out of his own pocket for costly damages and legal bills. 

What makes the party equipment rentals business especially profitable?

In broad terms, all rental businesses have become a smart way to earn more profit with minimum investment.

In the main, this is because more and more customers won’t want to tie their own capital up by buying new equipment for their use.

So they would prefer a rental rather than buying.

In the case of party rental businesses, this is an even stronger factor, since there is seldom a requirement on the part of the customers for such specialised equipment on a long-term or permanent basis.

Customers would much rather have use of all the necessary paraphernalia and equipment only for the timeframe of the occasion, even though they know that they are paying a hefty premium for that privilege.

For the owner of the equipment rentals business, there is also the benefit of having the ability to buy in volumes for discounts that are not available to one-time shoppers, so that the relative pricing of the rentals is even more profitable.

The next advantage for the operator of a party rentals business is that the range of equipment is relatively small.

For most equipment rental companies, such as heavy machinery, earth moving equipment, transport vehicles etc, it is very difficult to estimate the timetable of demand, so there is a stronger likelihood that the inventory is going to be sitting around for longer periods.

For a party rental business, there is a much smaller spread because this rental business has fewer products to rent, but larger volumes.

A simple example will illustrate this:

If a customer comes to a heavy equipment rental company looking for a trailer, he will have very specific ideas of what will be the right one, in terms of capacity, connectivity, weight-bearing and many other factors.

The rentals business may have the right one, but there are also chances that even though they have many trailers, none of them meet the customer’s needs.

So the business is lost, and the inventory sits on the floor.

For a customer looking to rent equipment for an upcoming event, the specifications will be far less specific.

A typical list could look something like this:

• A tent or tents big enough to seat 120 people
• Tables and chairs to seat 120 people
• Cutlery and crockery for 120 meal servings, plus finger-foods and drinks
• Audio equipment for speeches and dancing
• If the event is being held away from buildings, maybe a generator
• If it’s during the day in summer, maybe some portable air conditioning
• etc.

In this case, the customer isn’t setting the exact specification of what the rental business must supply.

This makes it much more likely that whatever you have in your inventory will match the customer’s needs.

What kind of insurance do you need to operate a party equipment rental business?

Public liability insurance

One of the most important facts that drive the need for insurance is that some people who aren’t your employees will be using the party equipment you are supplying.

This could create some liabilities if the equipment causes injury to someone while it’s out for rent and a claim is made that there was some fault in what you supplied.

An example could be if a fire breaks out in the dining area where food is being heated on hotplates you supplied.

The possibility of claims for bodily injury and property damage makes it essential that you should have general liability insurance.

Liability insurance covers you against:

• Accidental injury to a member of the public at the event, including any person not employed by you
• Accidental damage to property located at the event
• Improper or inadequate provision of your services

You need to remember that accidents can happen and there could be damage or even injuries to the event attendees, to patrons, or to your customers.

In the modern litigious world people are quick to point fingers wherever they can.

Without public liability insurance, you are throwing your whole future open to a court’s decision on who to believe.

Even if the decision doesn’t go against you in full, you can be left holding a bill for legal expenses. It makes much more sense to lay out the relatively small insurance premium up-front, and take the whole burden off your shoulders.

Professional liability insurance is coverage for your business that protects you from lawsuits and monetary claims alleging some error or omission by you or an employee in the conduct of your business. 

In the case of party equipment rental, when you accept an order from a customer, you are accepting some responsibility for consequences if for any reason what was agreed on doesn’t happen.

A typical example would be if the electricity generator you agreed to supply breaks down during the event, and all lighting and heating fails.

You could be required to pay all of the customer’s other costs, and even be held liable for associated damages.

If the customer is a business and this was an important event, such as a product launch being televised live, the resultant reputational damages could be astronomical.

If you could be held responsible, he may get a judgement for compensation.

This is when you need to have professional liability insurance.

This insurance covers the costs of legal defense (including any investigation or legal proceeding) related to errors, omissions, or negligence that are the result of performing your business.

Commercial insurance

Commercial insurance is needed to cover all of the business space you own or rent.

As well, all of the inventory that is stored on-site when not out at the customers needs to be insured against fire, theft, vandalism and all the other natural threats.

Since in your business you have substantial investment in specialized and costly equipment, it is essential to replace it in case of any damage, loss, or theft because without it, business will halt.

In the particular case of party equipment rental, the equipment has to be moved around extensively and sometimes stored in insecure and unsafe environments.

It may be subject to malicious damage, deliberate fire, theft, other such deliberate acts, or acts of nature like lightning strikes, hurricanes, earthquakes, and other highly damaging natural events.

Unless you can afford to immediately replace such expensive gear quickly out of your own pocket, you should have full-level commercial insurance so that you can immediately buy any equipment needed to keep the business running.

Commercial vehicle insurance

Most likely, you will be using a van or truck to cover you against the cost of bodily injury and property damage expenses while your employees or you are in transit to or from event sites.

It’s important to understand that using a private vehicle for business purposes could negate the cover, so it’s advisable to take out separate commercial vehicle insurance to ensure that your vehicle is covered for both its own value, and the valuable contents.

A proper commercial vehicle insurance package covers the value of any vehicle in case of malicious damage, fire, or theft.

As well, in case of any accident, the vehicle itself, the content and any legal bills, medical expenses, and property damage is covered if the company’s vehicle is involved in an accident.

Apart from the good sense that this makes, in most states, other than Virginia and New Hampshire, you are required by law to carry this type of insurance.

Workers compensation insurance

Workers’ compensation may not be mandatory in all states, but it is a sensible protection to cover you in case your employees are injured on the job.

Workplace accidents and the resulting injuries can occur no matter how safe you have made the workspaces.

And no matter whether or not your employees have their own health insurance, you are the one who is responsible for their medical costs if they suffer any job-related illness or injury.

On top of that, workers are entitled to a proportion of their regular wages over the period that they are unable to work due to their injury or illness.

If you don’t have worker’s compensation insurance, you will have to pay all of this out of your own pocket.

Some insurers do allow a business owner to include themselves in the workers’ compensation package, and this can make good sense if you don’t already have your own income protection cover.

Temporary insurance

If your business is just starting up, or your demand is seasonal, using short-term insurance may make good sense.

Business insurance by the month, day, or month – temporary insurance – may be a good option if you do not have enough continuous business activity to justify full insurance cover for a whole year.

Many insurance companies have begun to offer special policies where you can nominate a specific period when you want to be covered.

By only paying for the period of cover that you need it for, you will save by having lower premium costs while still having the same risk cover.

The key feature of short-term insurance is that you purchase the cover for a specific and defined period – a date on the calendar, or a week starting on a specific date, or a month – for example for 30 days beginning on the specified date, or 24 hour equipment insurance for one specific date.

If one event needs you to go out and borrow or rent some special equipment or auxiliaries, then it makes good sense to be able to extend your cover just for the time when these are under your control, and not to have to buy a whole year’s cover.

Note however that insurance for “mornings only” or such is not available.

It’s also a good idea for you to speak to an insurance agent or insurance broker to determine what other types of coverage your business might need.

FAQ

How much does it cost to start a party rental business?

Some estimates put the start-up capital requirements in the $50,000 to $75,000 range, but of course, it is highly dependent on the range of services you are offering and also the size and scope of the market you are targeting. 

Whereas basic domestic events could need just tables and chairs, tents, food-handling and heating equipment and so on, catering to large celebrations like weddings, company events etc. can require substantially more, in terms of both quantity and range.

Is equipment rental profitable?

As we said in the introduction, party equipment leasing can be a super-profitable business.

Of course, it needs proper planning, understanding of the market you are breaking in to.

Knowledge of the demand levels, and about your competition, are key elements that will determine how profitable your business is going to be.