Insurance for a Skid Steer: Owned, Financed, or Rented
- Jun 24
- 7 min read
A skid steer is one of the hardest-working machines on many excavation and site-work projects. Whether you're grading lots, loading trucks, clearing land, or handling materials, that machine is often on the job every day.
The problem is that insurance needs can look very different depending on whether the skid steer is owned, financed, or rented. Understanding insurance for a skid steer can help protect your business from unexpected repair costs, theft, accidents, and contractual requirements that often come with equipment ownership or rental agreements.
What Insurance Do You Need for a Skid Steer?
The insurance needed for a skid steer depends on how you acquired the machine:
Owned skid steer: Typically insured through an inland marine policy or equipment floater that covers contractor equipment.
Financed skid steer: Usually requires physical damage coverage to protect the lender's interest in the machine.
Rented skid steer: Often requires rented equipment coverage because rental agreements may make you responsible for damage or loss.
All situations: Most contractors should also consider general liability, workers' compensation, commercial auto, and potentially pollution liability coverage depending on operations.
The exact coverage needed depends on your contracts, equipment value, jobsite exposures, and state requirements.
Why Skid Steers Create Unique Insurance Risks
Skid steers are incredibly versatile, which is exactly why they create unique risks.
These machines travel between job sites, operate around workers, move expensive materials, and often work near utilities and structures. A single incident can lead to equipment damage, downtime, or third-party claims.
Common risks include:
Theft from jobsites
Vandalism
Collision damage
Fire
Trailer accidents during transport
Attachment damage
Hydraulic failures
Damage caused while loading or unloading
Accidental property damage on a project
For excavation contractors, even a few days without a skid steer can delay schedules and impact project profitability.
Insurance for an Owned Skid Steer
When you own a skid steer outright, protecting the machine becomes your responsibility.
One of the most important coverages is an inland marine policy, which covers contractor equipment while it moves between jobsites or is stored at different locations. Despite the name, inland marine insurance has nothing to do with boats. It is designed for mobile equipment and tools used away from a fixed business location.
Coverage may help protect against:
Theft
Fire
Vandalism
Certain accidental damage
Transportation-related losses
Many excavation contractors schedule their skid steers along with excavators, mini excavators, loaders, compact track loaders, and attachments under the same contractor equipment policy.
Why General Liability Isn't Enough
A common misconception is that general liability insurance covers damage to the contractor's own skid steer.
General liability insurance primarily protects against claims involving bodily injury or property damage caused to others. It generally does not cover damage to equipment you own.
For example:
If your skid steer damages a customer's retaining wall, general liability may respond depending on policy terms.
If your skid steer is stolen from the jobsite, inland marine coverage may be the policy that responds.
Different coverages handle different risks.
Insurance for a Financed Skid Steer
Financing allows contractors to acquire equipment without paying the full purchase price upfront. The trade-off is that lenders often require proof of insurance.
Because the lender has a financial interest in the machine, they typically want protection in case the skid steer is damaged or destroyed.
Most financing agreements require:
Physical damage coverage
Proof of insurance
Lender listed as a loss payee
Continuous coverage during the loan term
A loss payee is a party with a financial interest in insured property. If a covered loss occurs, the lender may receive payment according to the financing agreement.
What Lenders Usually Want to See
When financing equipment, lenders frequently request:
Certificate of insurance
Equipment schedule
Policy limits
Proof that coverage remains active
Failure to maintain required coverage could create problems under the financing contract.
Every lender's requirements differ, so contractors should review financing documents carefully and discuss them with a licensed insurance agent.
Insurance for a Rented Skid Steer
Renting equipment is common when workloads increase, a machine breaks down, or a specialized attachment is needed for a specific project.
Many contractors assume the rental company's insurance covers everything. That assumption can become expensive.
Rental agreements often place responsibility for equipment damage on the contractor renting the machine.
What Is Rented Equipment Coverage?
Rented equipment coverage is designed to help protect equipment you do not own but are legally responsible for under a rental contract.
Depending on policy terms, it may help address losses involving:
Theft
Fire
Vandalism
Collision damage
Certain accidental damage
Coverage varies by insurer and policy form, so contractors should carefully review rental agreements before signing.
Read the Rental Agreement Carefully
Many rental contracts include provisions that make the renter responsible for:
Physical damage
Theft
Transportation damage
Certain storage-related losses
Deductibles
Before taking delivery of a rented skid steer, verify what insurance obligations exist and whether your current policy addresses them.
Coverages Excavation Contractors Should Consider
Skid steer insurance is usually just one piece of a larger risk management plan.
General liability insurance helps protect against claims involving bodily injury or property damage caused to others.
For excavation and site-work contractors, this may include situations involving:
Property damage
Jobsite accidents
Third-party injuries
Legal defense costs, depending on policy terms
Many general contractors require proof of liability coverage before allowing subcontractors on a project.
Inland marine insurance is often the primary coverage used to insure mobile contractor equipment.
It may help cover:
Skid steers
Excavators
Compact track loaders
Attachments
Trench boxes
Portable tools
This coverage becomes especially important when equipment regularly moves between jobsites.
Workers' Compensation Insurance
Workers' compensation insurance provides benefits for employees who suffer work-related injuries or illnesses.
Skid steer operations involve:
Loading activities
Ground personnel exposure
Material handling
Uneven terrain
Workers' compensation is required in most states when employees are present.
Commercial Auto Insurance
Many contractors transport skid steers using trucks and trailers.
Commercial auto insurance helps address vehicle-related exposures involving business-owned vehicles.
Coverage may become important when:
Hauling equipment between projects
Pulling heavy trailers
Traveling to remote jobsites
The Federal Motor Carrier Safety Administration offers valuable information regarding commercial vehicle safety and transportation requirements at https://www.fmcsa.dot.gov.
Pollution Liability Insurance
Excavation contractors face environmental exposures that many standard policies may not fully address.
Pollution liability insurance may help protect against claims involving:
Fuel spills
Hydraulic fluid releases
Contaminated soil
Environmental cleanup costs
This coverage is particularly important when working around sensitive sites, utilities, or environmental hazards.
Factors That Affect Skid Steer Insurance Costs
Contractors often ask how much skid steer insurance costs.
The reality is that pricing varies significantly.
Factors that may affect premiums include:
Equipment value
Age of the machine
Financing requirements
Claims history
Geographic location
Security measures
Number of employees
Annual revenue
Type of excavation work performed
Deductible selections
Coverage limits
A contractor performing residential grading may present different risks than a company handling large commercial utility projects.
Because insurance is highly individualized, obtaining quotes from a licensed agent is the best way to understand actual costs.
Risk Management Tips for Skid Steer Owners and Operators
Insurance is important, but preventing losses is even better.
Consider these practical steps:
Lock equipment when not in use.
Store machines in secured areas whenever possible.
Use GPS tracking technology.
Maintain service records.
Train operators properly.
Inspect trailers and tie-downs regularly.
Document equipment condition before and after rentals.
Follow manufacturer maintenance schedules.
Conduct daily safety inspections.
Contractors can also improve safety by following equipment best practices published by the Occupational Safety and Health Administration (OSHA) at https://www.osha.gov.
Reducing claims can help support long-term insurability and potentially improve future pricing opportunities.
Certificates of Insurance and Contract Requirements
Many excavation contractors encounter insurance requirements from:
General contractors
Municipal projects
Developers
Utility contractors
Property owners
These requirements often include providing a Certificate of Insurance (COI).
A COI is a document that summarizes certain insurance coverages and policy information. It does not change coverage but helps verify that insurance exists.
Before bidding work, contractors should review insurance requirements to avoid delays after contract award.
Choosing the Right Insurance Strategy
The right insurance approach depends on how your skid steer fits into your operation.
An owner with multiple machines may need a comprehensive contractor equipment schedule.
A contractor financing a new machine may need to satisfy lender requirements.
A company that frequently rents equipment may need coverage designed specifically for rented and borrowed machinery.
The key is making sure insurance aligns with actual business operations rather than assuming one policy covers every exposure.
Working with an agent familiar with excavation, site work, land clearing, demolition, septic, and drilling operations can help identify potential gaps before a loss occurs.
FAQ
Does general liability insurance cover my skid steer?
Generally, no. General liability insurance is designed to address claims involving damage or injury to others. Damage to your own skid steer is typically addressed through equipment coverage such as inland marine insurance.
Do I need insurance on a financed skid steer?
Most lenders require insurance while the loan remains active. Specific requirements vary by lender and financing agreement.
Does rental company insurance cover rented skid steers?
Not always. Rental contracts often place responsibility on the renter for certain losses. Review rental agreements carefully and confirm coverage with your insurance agent.
What is the best insurance for a skid steer?
Many contractors rely on inland marine insurance for equipment protection, combined with general liability, workers' compensation, commercial auto, and other coverages based on their operations.
Are skid steer attachments covered under equipment insurance?
Many policies can be structured to include attachments, depending on how the equipment is scheduled and insured. Coverage details vary by policy.
Protect Your Equipment and Your Business
Whether your skid steer is owned, financed, or rented, the right insurance program can help protect one of the most valuable tools on your jobsite. Every excavation business operates differently, and coverage should be tailored to your equipment, contracts, and risk exposures.
Excavating Insurance Partners specializes in insurance solutions for excavation, site-work, land clearing, demolition, septic, drilling, and heavy equipment contractors. Contact our team today for a free quote and a review of your current insurance program.
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