We ban home use / borrowing of all equipment.

The basis is:

Equipment borrowed sometime didn't come back on time and caused issues.
Equipment came back damaged or faulty. Any equipment we loaned out had to be examined on return before being used at work and this started to take up too much time.

My opinion is the company would be liable if an incident occured, loaning out work equipment to untrained users with no insurance would be a big no no for me - especially heavy equipment such as a digger (under a tonne or not).

Can the company loan a trained person to perform the task aswell? then just a simple RAMS could cover it safely and fully insured?

I have encountered this before in a previous job and it was actually one of the directors wanting to borrow a telehandler.

Not the best thing to let someone who is untrained have the use of a machine and I would argue strongly against it but what can you do when that person happens to be at the top of the pile and will just take the machine anyway?

The way it was handled was the company hired the machine to the director for a nominal fee and the director paid for a damage waiver and all was covered.

When plant hire companies hire out machines they don't ask if the person operating it is trained and it isn't their responsibility if there is an incident, it is the hirers responsibility.

That being said, the company may share some of the blame if they hire a machine to someone knowing they were untrained and that they were going to operate the machine themselves.

As far as your insurance cover for this sort of thing goes I would check with the insurer.