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Rental Equipment and Tools

When a rented generator, heater, floor sander, dehumidifier, or other piece of equipment fails or starts a fire, there are usually three places to look: the rental company, the manufacturer, and whoever was running the equipment. The rental agreement matters a lot, because it often shifts risk onto the customer. Save the equipment before the rental company takes it back.

What it coversGenerators, heaters, sanders, rental agreements, maintenance vs. defect vs. misuse

Step-by-step checklist

Identify

Contact the claim adjuster right away. Ask them to hold the scene and for permission to retain an expert at the client's expense. Note the call in the file.
On every claim, ask the client whether they want an origin and cause investigator to review the scene, or confirm one is already assigned. Note their answer in the file so the decision is on record.
Make sure no evidence is touched or moved until the expert has secured the scene
Get the client's approval for the scene exam cost. Most run at least $1,600 with travel, the day rate, and expenses.
Identify the equipment, the rental company, and the manufacturer
Get the rental agreement and the receipt
Find out who was using the equipment, and how

Hands off until the expert arrives. Nothing at the scene gets touched, moved, repaired, or thrown out until the origin and cause investigator has secured it. Evidence that's moved early can sink the whole recovery.

Notify

Tell the rental company in writing not to pick up, repair, or scrap the equipment
Notify the rental company, the manufacturer, and their carriers
Notify the user if it was a contractor or a tenant, not the insured

Investigate

Hold a scene exam before the equipment leaves
Request the rental company's maintenance and inspection records for that unit
Check for recalls on the model
Lab-test the equipment, then review the expert's report

Demand

Review payments and out-of-pocket costs
Sort the supports into photos, estimates, invoices, and reports
Send the full demand packet

Negotiate

Keep the rental company and the manufacturer on notice until the cause is known
Follow up, and use a tolling agreement if the deadline is close
If liability is accepted, negotiate. If not, review for ADR.

Settle

Review the release, and make sure it doesn't free the manufacturer if you settle with the rental company
Receive payment, issue the deductible and client payments
Final file review, then close

1. Identify

Common rental equipment losses

Equipment	What goes wrong
Generators	Fuel leaks, fires from refueling while hot, bad wiring, backfeeding into the home
Portable and construction heaters	Fires from being too close to materials, tip-overs, bad fuel lines or connections
Dehumidifiers and air movers	Electrical fires, often during water mitigation after another loss
Floor sanders and finishers	Sparks, dust fires, and oily rags left by the user
Pressure washers and pumps	Leaks, fuel fires, water damage from failed hoses
Lifts, trucks, and heavy equipment	Striking the building, tipping, fluid leaks

Responsible parties to consider

The rental company, for renting out equipment that was worn, damaged, or poorly maintained
The manufacturer, for a design or manufacturing defect
The person using the equipment, such as a contractor, tenant, or restoration company
The restoration company, if the equipment was placed during water or fire mitigation

Maintenance vs. defect vs. misuse

Ask three questions. Was the unit maintained and inspected between rentals? Did a part fail that should not fail? Was it used the way the instructions say? The answers point you at the rental company, the manufacturer, or the user.

2. Notify and investigate

Save the equipment first

Rental companies want their equipment back fast. Once it is repaired or scrapped, the evidence is gone. Send a written preservation request the same day you learn of the loss.

Read the rental agreement

Look for:

An indemnity or hold harmless clause that makes the customer responsible for losses
A damage waiver the customer may have bought
A waiver of subrogation or a limitation of liability
Insurance requirements for the customer

These clauses usually bind the customer who signed the agreement. They may not stop a claim against the manufacturer, and they may not bind the insured if someone else rented the equipment.

Evidence checklist

Rental agreement, receipt, and any damage waiver
The equipment itself, including the serial and model numbers
Maintenance, repair, and inspection logs for that unit
Recall notices for the model
Photos of where and how the equipment was set up
Statements from the person who used it

3. Demand, negotiate, and settle

Liability theories

Negligent maintenance or inspection by the rental company
Product liability against the manufacturer, and in some states against the rental company too
Breach of warranty
Negligent use by a contractor or other user

Defenses to expect

Defense	How to answer it
The customer misused it	The instructions, where it was placed, and the expert's findings on the failure
The rental agreement shifts the risk	Check who signed it, and whether the clause covers the rental company's own fault. Many states read these clauses narrowly.
It was fine when it left the store	Maintenance logs, past complaints, and the lab exam
It's the manufacturer's problem	Keep both on notice. The rental company may still be responsible for inspection.

Negotiating and settling

The rental company and the manufacturer will often point at each other. Keep both on notice.
Review the release with the release checklist.
Close with the standard closing letter and the deductible reimbursement letter.

4. Letters for this loss

Step	Letter	Sent to
Identify	Subrogation Opening Letter to Insured	Insured: rental agreement, receipt, photos
Notify	Notice of Subrogation Interest and Insurance Request	Rental company, manufacturer, user
Notify	Notice of Subrogation Interest to Adverse Carrier	Each party's carrier
Investigate	Evidence Preservation and Joint Scene Exam Notice and to Responsible Party	All parties
Investigate	Joint Lab Exam Notice	All parties
Demand	Subrogation Demand to Adverse Carrier or to Responsible Party	Carrier or party
Negotiate	Second Demand with Escalation Notice, Tolling Agreement Request	Carrier(s)
Settle	Release Review Checklist, Closing (Made Whole) or Pro Rata, Deductible Reimbursement	Client and insured
No recovery	No Recovery Closing Letter	Client, for example when the insured's own misuse caused it