Equipment finance insurance protects lenders in the event of default by the equipment lessee. For instance, imagine a construction company leasing heavy machinery for a project. If the company defaults on its lease payments, equipment finance insurance can reimburse the lender for the remaining balance owed on the equipment.
Equipment finance insurance is essential for lenders because it protects them from financial loss. It is also beneficial for lessees, as it can help them obtain more favorable lease terms. Historically, equipment finance insurance was only available to large businesses. However, in recent years, it has become more accessible to small businesses.