Does a CPM policy cover machinery while it is out on hire?

It can be arranged, but it should never be assumed automatically: the hire activity has to be disclosed openly to the insurer, and the policy has to set out whether and on what terms damage caused by the hirer is covered. Deliberate acts by the hirer – failure to return the machine, misappropriation, fraud – are normally not covered by a standard CPM policy, or are covered only through a special extension.

When this answer applies to your situation

• The company hires out excavators, loaders or other machinery to customers.
• The machine is handed over to the hirer without the lessor's operator.
• The hirer wants to understand whether they need their own policy.

What can change the answer

• Whether the insurer knows about and has accepted the hire activity – undisclosed hire can affect the claims decision or the amount paid.
• How the policy defines damage caused by the hirer and gross negligence.
• The distinction between theft and misappropriation: misappropriation (the hirer does not give the machine back) is normally a separate risk.
• The quality of the hire contract: identification, deposit, GPS, allocation of liability.

What to check in the policy or quote

• Disclosure of the hire activity in the policy
• Cover and deductible for damage caused by the hirer
• The clause on the misappropriation/non-return risk
• Requirements for vetting the hirer and for the contract
• GPS and immobiliser requirements

The typical mistake

The lessor relies on the fact that "the machine is insured", but the policy was written for own use. A loss caused by the hirer, or a non-return, reveals that the hire risks in particular are outside the cover.

Example

A situation typical in practice (generalised example, not a specific client)

A typical situation: a mini excavator is hired out to a private individual and is not returned; the "hirer's" documents turn out to be forged. This is a fraud/misappropriation scenario, not theft – without a special extension the policy normally does not respond here, so the programme has to be built together with controls over the hire process.

Related content

• Plant and machinery insurance (CPM)

This is not individual insurance advice; actual cover always depends on the chosen insurer's wording and the special conditions of the policy.