Myth: If I’m renting my equipment to someone, it’s OK to just get a certificate. I don’t need to get signed rental contracts.
Fact: If you rent your equipment, you must require the renter to give you a certificate AND to sign your rental contract.
The type of document that an insurance agency issues more than anything else is a certificate. Our agency outputs tens of thousands of them per month, and the reason for that is simple: Certificates prove to other people that you have insurance. Let’s face it: Nobody would buy insurance from us just because they want to. The main reason that many people purchase insurance is that somebody requires it of them. If you need production insurance, the likely reason is that you are renting equipment, pulling a film permit, or securing a location. The most common reason that clients ask me for certificates is for equipment rental, but that’s where things get complicated. You also need rental contracts.
The Problem with Insurance Certificates
You see, a certificate doesn’t DO anything for the person to whom you give it. At the top of every standard ACORD certificate issued in this country, it states in big, bold letters:
“This certificate is issued as a matter of information only and confers no rights upon the certificate holder.”
The document goes on to state that it does not extend or alter coverage in any way and that it does not constitute a contract between the holder and the insured. Many rental houses do not understand this. They think that if they get a certificate that names them additional insured and loss payee, then they are completely covered. However, if this is all they have, then the insurance company can easily refer to the words at the top of the certificate and point out to them that there is no contract between them and the renter. It’s just a piece of paper that tells somebody that they have insurance coverage, and that’s it.
The Solution is a Certificate AND Rental Contracts
So what do you do? You require that your renter also signs a rental contract. Most rental houses already have rental contracts, but they don’t always require the person renting to sign them. If you are renting out to anybody, you must demand that they sign the contract and give them the certificate. That then references the contract, and the contract refers to the cert, so once you have them together, then you have a properly executed legal agreement. If something happens, you can go straight to the insurance company listed on the certificate and start the claims process.
If you are a renter with questions of how to get proper certificates, or if you are a rental house with questions of what else you might need to request from your renter, feel free to contact us at Equipment and Production Insurance and we can help you out!