This is a little different than the OP's issue, but I found that the typical homeowners policy only insures your tractor loss in very defined circumstances. If you park it in your garage and a tree falls on your garage, damaging your tractor...homeowners. If you park it outside and the tree damages nothing but your tractor...not covered. If you're using the tractor and anything happens to it...not covered. If you're trailering your tractor, your tractor NOR your trailer is covered by the auto insurance.
I took out a policy on my tractor for ~$250 per year. For a $250 deductible, it covers the tractor in nearly every circumstance. If I slip down a hill and ram a tree with the FEL, ripping it off the tractor...covered. On a trailer...covered. Does an endo off my driveway while clearing snow and bends an axle...covered.
I'm not a fan of insurance and don't pay for the "protection plan" on my TV or computer. But I've had my tractor in some tricky spots before and as dumb as I feel paying $10 a month for nothing, I'd feel MUCH dumber not having it insured and something major happen.
But I agree with others...NOBODY is going to loan you money for an object, using that object as collatoral for the loan, and not require insurance on the collatoral. You always have the option of NOT using the tractor as collatoral, but you'd either levy the purchase against your home or pay 10 times the interestfor an unsecured loan.
They're gonna git-cha whichever way you go.