This policy helps pay for repair or replacement of a contractor’s tools and equipment if they are lost, stolen, or damaged. The items typically must be less than five years old.
Contractor's tools and equipment insurance is a form of inland marine insurance for small tools and equipment. Also called equipment floater insurance, it's designed for construction and contracting companies and installation professionals that work at different job sites.
It protects movable tools and equipment wherever you take them, and pays for repair or replacement if they are lost, damaged, or stolen. However, it does not cover general wear and tear.
This coverage is designed for business equipment that travels with you to jobsites. Specifically, it covers:
You can often add this coverage to commercial property insurance or a business owner's policy (BOP).
Contractor’s tools and equipment insurance protects hand tools, power tools, machinery, and other equipment that moves from place to place. The items typically must be relatively new and inexpensive.
This policy can cover a variety of items and incidents, including the following:
Contractor's tools and equipment insurance can provide reimbursement for hammers, saws, and other employee tools stolen from a jobsite, a client's property, or a storage unit. It also covers items stolen in transit.
This policy can cover the cost of replacing a broken tool or repairing a piece of equipment that has been damaged. However, it does not cover normal wear and tear.
Contractor’s tools and equipment insurance covers the cost of removing graffiti and repairing equipment damaged by vandalism.
Some policies include protection for contractors who lease or rent equipment. That could include coverage for equipment that you rent for a project, or while you wait for repair of damaged equipment.
Because it covers items valued at under $10,000, this policy is very affordable. Small business owners pay an average premium of only $14 per month.
Factors that affect the cost of contractor's tool and equipment insurance include:
A standard commercial property insurance policy won't cover tools in transit or equipment stored at a worksite. It’s risky to move items and store them off-site, which is why you may need additional coverage.
Contractor's tools and equipment insurance benefits a wide range of professionals who bring tools and equipment to jobsites. Both small business owners and independent contractors should consider carrying this coverage.
Businesses that purchase this property coverage include:
Construction businesses rely on this policy to cover potential losses at a worksite or construction project.
If your toolbox is stolen from a client's backyard, or a recently purchased scissor lift breaks during a project, contractor’s tools and equipment insurance can pay for its repair or replacement. The damage could happen while your belongings are in transit or in storage away from your business office.
For example, say an electrician’s toolbox disappears while left overnight at an office worksite. Contractor’s tools and equipment insurance would cover the cost of purchasing a new toolbox and replacing the tools that were stolen.
Installation professionals depend on this policy to protect their tools and equipment left at a client's home, office, or other property during a project.
For example, it could cover the cost of replacing a fence installer's post hole digger stolen from a client's yard, or an appliance installer's adjustable wrench set stolen from their van.
It also covers damaged and destroyed items, such as a shipment of glass for a window installer that's stored outside at a client's property during a windstorm.
Because they work at different outdoor locations, landscapers need contractor's tools and equipment insurance to protect their lawnmowers, leaf blowers, and other tools of the trade.
This policy covers the cost of rakes and hedge trimmers stolen from your pickup, or a replacement lawnmower if yours breaks unexpectedly.
Travel and outdoor storage are both risky, which is why this coverage is so important for tree service professionals, lawn care companies, and others who bring their work equipment with them wherever they go.
Contractor's tools and equipment insurance is ideal for a business that operates on a small budget. However, it doesn't cover every instance of property damage, and it's not designed for certain types of equipment.
Here are a few examples of common exclusions.
Items damaged by general wear and tear, such as a lawnmower's blade that dulls over time, are not covered by contractor's tools and equipment insurance.
Deliberate breakage or misuse are also not covered by this policy. For example, if a worker tries to suck up a large puddle with a leaf blower vacuum, your policy won't cover the resulting water damage.
Items that are more than five years old are typically not eligible for coverage.
Items valued at more than $10,000 are also not covered by this policy. For example, it might cover a small, low-powered tractor, but not a top-of-the-line one.
Vehicles owned by your business should be covered by commercial auto insurance. Hired and non-owned auto insurance (HNOA) is the right policy for leased, rented, and personal vehicles used for work purposes.
If you're a small business owner or a contractor, you may be able to add contractor’s tools and equipment coverage to your business owner’s policy. A BOP bundles general liability insurance with commercial property insurance, usually at a lower premium than purchasing each policy separately.
Read more about the eligibility requirements for a BOP.
Simply put, it depends on the items you wish to insure. Contractor's tools and equipment insurance is designed for items valued at less than $10,000. Specialized equipment or heavy machinery may require inland marine insurance.
If you're looking at an item like a costly bulldozer, backhoe, or excavator, inland marine insurance is likely the appropriate policy. If you only need insurance coverage for lawnmowers, saws, or hand tools, then contractor's equipment insurance should be enough.
There's also equipment breakdown insurance, which is designed for machinery or equipment that suffers mechanical failure at your business.
If you're unsure which policy you need, consult a licensed insurance agent who can help you find the right equipment insurance policy for your small business.