Paul,
First of all, you don't give an area or location in your post, and of course that can make a big difference to how you get your business known

.
Secondly, from your statement:-
I'm getting the impression, that you are present during the hire period, which technically means that you could easily get away with having your equipment covered by a standard "all risks" policy

, the only time that you would need to negotiate a seperate hire policy, would be if a customer collected the gear from your address, used the gear themselves, and then returned it after the hire period?. However, from what you have posted above, then I do get the thought that you either set up and dismantle the sound / lighting gear yourself, or are present during the hire period?.
Hiring equipment out without any form of supervision, does pose some risk, especially with expensive sound & Lighting equipment. Not only from lack of knowledge of how it's set up and from incorrect use, but more so, with the gear going walkies . When hiring out, make sure that you take copies of 2 forms of ID (I insist on Passport or drivers license and 1 current utility bill), I also make a note of the registration number of the vehicle they arrive in

. CCTV, is also a good investment and ideal for identification purposes, should the hirer never return with the gear!!!!. It does sound a little O.T.T, but you would be surprised at how much gear I lost at the start, due to theiving

.
You basically answered your own question here

, word of mouth advertising is of course your best (and cheapest) form of advertising, whether its a hire business or a Mobile Roadshow. Sound & Lighting rigs tend to be hired by Bands - especially those who are just starting out and don't have the financies to fund their own P.A, So you could try targeting the national Music / Group based Magazines. Also ask any rehersal studios or recording studio's if they will advertise your rig for you, since their clients may soon be ready to go out and "gig" - your local sixth form college, Uni etc may also be a useful place to advertise, since it's amazing how many students in their teens suddenly decide to form a band!.
Get some good business cards printed, and whenever you attend a gig which is also advertised, then negotiate a small discount with the client, to have your details printed on their own Tickets / Flyers / Brochures as in "P.A and Lighting supplied by Event Systems - (01XXX) XXXXXX".
An Advert in Yellow pages gets mixed reactions on here, so you may want to research that a little more. If you advertise in your local yellow pages it'll cost around £300 - if you go national with Y.P they'll expect you to have a small fortune tucked away, remortgage your house, and cough up a lung!!!!. Yellow pages has never worked for me, but it has for some other folks on here, so don't dismiss it out of hand, but then don't expect miracles either!.
Website advertising is one of the best advertising medium's around, and also one of the cheapest. However the traffic it creates depends on the effort you put in to it!. For instance it isn't just a case of building a site and then waiting for the hits to start, you need to get it on the search engines, optimise your keywords etc. See our Website section on this forum for more tips on this. Oh and get a domain name similar to your business name - i.e Eventsystems.co.uk or Event-Systems.co.uk if thats already taken. Also go for paid hosting rather than free sites with banners, since this gives a far better professional impression.
Most Health and Safety issues are indeed just common sense, although you should be aware that hire equipment MUST be P.A.T tested between every hire period. In other words, when a customer returns an appliance back to you, then you would need to P.A.T test it again, before it was hired to another client!. This doesn't apply if you accompany the hire gear and you are the one using it, in which case you would only need to P.A.T test every year, just the same as a Mobile D.J would.
P.L.I is only needed if YOU are in attendance during the hire period. I always point out that the client is responsible for safe use of the equipment and arranging their own insurance cover where required. I get this in writing at the time of the hire, basically stating that I will not be held liable for any damage to persons or property through the neglect of the hirer, or incorrect use of the equipment.
Finally, of course is the above mentioned hire agreement which should be written to be as tight as a duck's

, and cover you against any eventuality - however unlikely!. I paid a solicitor £60 to draft mine, and it was money well spent!. Get all details in writing, along with a returnable hire deposit.
If you intend on running it as a business and above board, then don't forget to inform the Inland Revenue of your activities, since it's better to tell them sooner, rather than later!.