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, theirs is the common threat that, after making payment to their policyholder, that 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 one of our insurance professionals.