Farming is equipment intensive and much of the equipment needed for various tasks are complicated and expensive. Most equipment is used with enough frequency that they are purchased and fully owned. However, farmers often have to preform jobs or have need of certain equipment on an infrequent or for a single need. In these instances, there’s no financial justification for having such equipment available on a full-time basis. On other occasions, a farmer may have equipment that is unavailable because of scheduled maintenance or repairs. In other words, situations come up when a farmer makes use of equipment borrowed from another party.
Fortunately, in most instances of using borrowed equipment, nothing goes wrong; it is simply borrowed, used, and returned. However, what happens when something does go wrong? Even if you have an insurance policy that covers farm equipment, it may not cover borrowed equipment or, when it does provide coverage, it could be only for a token amount. If you borrow and substantially damage a tractor or harvester, your neighbor is not going to accept an excuse that your policy either excludes coverage or only makes a grossly insufficient amount of protection available. If the equipment owner has coverage for that equipment, there is the common threat that, after their insurance company makes payment, the insurer could look to you for reimbursement.
Besides the issue of being responsible for damage to another party’s property, there is a separate liability exposure. Many policies that cover owned farm equipment exclude losses for borrowed equipment. Such exclusions can be quite broad including situations involving equipment that’s borrowed, rented or which is merely in your possession.
In many situations it makes perfect sense to use equipment that you don’t own. However, since such use comes with the danger of both property and liability losses, be sure that your policy provides you with the right kind and the right amount of protection. Most companies that provide farm equipment coverage have coverage options that you should discuss with an insurance professional.
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