If you’re thinking about moving into a new line of equipment to meet customer demand, there’s more to it than just buying machines at The Rental Show.

Even if you do the proper research to find the best equipment, determine rental rates, figure out maintenance needs and the labor involved, there is one other factor that many rental store owners might neglect — the cost of risk.

“If you’re going into a substantially higher risk line of equipment like high-reach or inflatables, insurance rates can be significantly more,” says Phil Kelling, president and CEO, ARA Insurance, Kansas City, Mo.

“The cost of risk might change the equation from a profitable move to unprofitable, especially if you’re moving into something totally different from what you normally rent. You need to do your homework, be aware of this and build it into the equation,” Kelling says.

“It’s as easy as calling your insurance agent and explaining what you plan to do because insurance policies can have provisions that if the characteristics of risk change significantly, it can void the contract,” he says.

Kelling also suggests that equipment buyers be aware of the practices of some insurance companies when it comes to inventory. While ARA Insurance makes an adjustment once a year based on overall inventory value, some insurance companies want updated lists whenever new equipment is purchased and if it is not on the list, it may not be covered.

Another question, he says, is transit. “If you buy equipment at the show, you need to know if you have the proper transit coverage to get it home. ARA Insurance provides for that, but some companies may have limitations. That means you might only be covered for $10,000 in transit coverage when it’s a $25,000 piece of equipment,” Kelling says.