Matt Salvage, Head of Client Management at Acquis, discusses how avoiding the administration required to accurately track insurance on your leased portfolio can lead to unnecessary risk
LEASE, TRACK, PROTECT, REPEAT might sound like a resource heavy and unwelcome task, but in order to accurately develop a true picture of whether your leased assets are adequately protected, that’s exactly what it takes.
When responsibility for insuring leased equipment falls to the lessee, it can prove difficult to determine whether a leasing portfolio is adequately protected. Often, taking on the additional work involved in establishing whether equipment has been insured is not an option. Working with our client partners we regularly see portfolios where as many as 80% of financed assets are underinsured. And therein lies the risk.
When leased equipment is rendered unusable by damage, loss or theft, customers needing to make a claim may find that the equipment is not insured at all, or, if it is, they have a large excess to pay on their business insurance policy that renders the claim unviable. Where damaged equipment is business critical, this may result in disruption to lease payments for the period where cash flow is impeded, or, at worst, may involve having to pursue legal action to mitigate against significant financial loss.
To gain a clear picture of a lessor’s underinsured exposure, it is necessary to follow up with each customer directly to establish the level of insurance on the leased equipment, as well as regularly monitoring agreements for any insurance lapses during the full agreement period. Any equipment identified as uninsured can then be added to a lessor’s master policy to ensure it is fully protected.
Choosing to outsource the tracking of your insurance to a specialist will free your teams from the additional administration involved so that they can concentrate on what they do best: arranging the lease agreements. Acquis tracks the insurance status on over 600,000 leased assets for the life of the agreement. By obtaining evidence of insurance, policy details and an understanding of the nature of the lessee’s insurance product and the extent of cover, our clients are able to determine the quality of the policy to ensure the cover is adequate and thorough due diligence has been conducted.