What is contractor tools and equipment insurance?
Contractor tools and equipment insurance is commonly written as inland marine coverage. It is designed for covered property that moves between locations or is used away from the contractor’s primary premises.
Depending on the policy, it may cover hand tools, power tools, contractor equipment and other property at jobsites, in transit or at temporary storage locations.
Coverage is not identical across insurance companies. Contractors should compare valuation, deductibles, schedules, blanket limits, theft restrictions and where the property is covered.
Property that may be insured
Depending on the policy and schedule, coverage may be available for:
- Hand tools
- Power tools
- Compressors and generators
- Welders and cutting equipment
- Concrete and masonry equipment
- Ladders and scaffolding
- Landscaping equipment
- Compact loaders and skid steers
- Mini excavators and trenching equipment
- Mobile lifts and specialized equipment
- Rented, leased or borrowed equipment when included
Road vehicles generally belong on a commercial auto policy. Buildings, office contents and property that stays at a permanent location may fit commercial property coverage instead.
Scheduled equipment and blanket tools
Larger equipment is often individually scheduled with a description, serial number and insured value. Smaller tools may be covered under a blanket limit rather than listing each item separately.
Contractors should review:
- The blanket tools limit
- The maximum amount available for any one item
- Which items must be scheduled
- The deductible for each loss
- How newly acquired equipment is handled
- Whether employee-owned tools are included
A blanket limit should reflect the amount that could realistically be lost in one event—not merely the value of an average tool.
Are tools inside a work truck covered?
Commercial auto physical damage generally protects the covered vehicle rather than loose tools and equipment carried inside it. Tools may need inland marine or tools and equipment coverage.
Contractors should also review whether the policy restricts theft from an unattended vehicle. Requirements may involve locked vehicles, secured compartments, evidence of forced entry or particular storage practices.
Learn more on the Tools in Work Trucks page.
Jobsites and temporary locations
Tools and equipment may remain at an active jobsite overnight or over a weekend. Coverage at an unscheduled or temporary location should be confirmed rather than assumed.
An insurer may ask about:
- Fencing and controlled access
- Locked buildings, trailers or storage containers
- Lighting and surveillance
- Whether the jobsite is occupied overnight
- How long equipment remains at one location
- Whether equipment is left outdoors
- The largest concentration of property at one site
A policy may contain different limits or conditions for property at a jobsite, in transit, at the contractor’s premises or inside a vehicle.
Rented, leased and borrowed equipment
Contractors frequently rent specialized equipment for a particular project. A rental agreement may make the contractor responsible for damage to the equipment, continuing rental charges or other expenses.
Some policies can include rented or leased equipment, but contractors should review:
- The rented-equipment limit
- The deductible
- Valuation provisions
- Continuing rental charges
- Loss-of-use charges
- Transportation expenses
- Property rented with an operator
- Rental-agreement requirements
Do not assume that a certificate of insurance or general liability policy satisfies every obligation in an equipment rental agreement.
Employee-owned tools
Employees may bring their own hand tools or power tools to work. Those items are not automatically covered under every contractor equipment policy.
If employee-owned tools should be insured, tell Ford Agency and keep records showing ownership, descriptions and values. Coverage may be subject to a separate limit or endorsement.
Replacement cost versus actual cash value
Valuation determines how a covered loss may be settled. Depending on the policy, equipment may be insured using:
- Replacement cost: the cost to replace covered property with comparable new property, subject to policy terms.
- Actual cash value: value after considering factors such as age, condition and depreciation.
- Agreed or scheduled value: treatment based on an amount shown in the policy, subject to the applicable form.
The value shown on a schedule does not always guarantee that the full amount will be paid. The policy’s valuation and loss-settlement provisions control.
Common limitations to review
Policy forms differ, but contractors should pay attention to limitations or exclusions involving:
- Wear and tear
- Mechanical or electrical breakdown
- Rust, corrosion or deterioration
- Flood or surface water
- Earth movement
- Employee theft or dishonest acts
- Voluntary parting with property
- Unexplained disappearance
- Property left in an unlocked vehicle
- Property left outdoors
- Underground equipment
- Waterborne equipment
- Equipment used for prohibited operations
Additional coverage may sometimes be available by endorsement or through a different policy form.
Keeping an accurate equipment schedule
A current equipment schedule can make quoting, underwriting and claim handling more efficient. For larger items, record:
- Description
- Manufacturer
- Model
- Serial number
- Year
- Purchase price
- Current replacement value
- Ownership or financing information
- Primary storage location
Keep receipts, photographs and equipment records somewhere other than the truck, trailer or location where the property is stored.
Security and theft prevention
Theft is a major concern for mobile tools and equipment. Practical controls may include:
- Locking vehicles, trailers and storage containers
- Using secured compartments and high-quality locks
- Removing small high-value tools overnight
- Using alarms, cameras or GPS tracking
- Marking equipment with identification numbers
- Maintaining an up-to-date inventory
- Restricting key and equipment access
- Reporting theft promptly to law enforcement and the insurer
Risk-control practices do not guarantee coverage, but they can reduce losses and may help demonstrate the quality of the account to an underwriter.
What affects tools and equipment pricing?
Eligibility and pricing may be influenced by:
- Total tool and equipment values
- The value of the largest single item
- Scheduled and blanket limits
- Selected deductibles
- Valuation basis
- Storage and security practices
- Operating territory
- Equipment age and condition
- Rented or leased equipment exposures
- Prior theft or equipment losses
- The contractor’s trade and operations
How this coverage fits with the contractor program
Tools and equipment coverage does not replace liability, auto, workers’ compensation or property insurance. A coordinated contractor program may include:
- Contractor general liability insurance
- Workers’ compensation insurance
- Commercial auto insurance
- Contractor inland marine insurance
- Commercial property or business owners coverage
- Installation floater coverage
- Builders risk insurance
What to send Ford Agency
Useful information for a tools and equipment insurance review includes:
- A schedule of larger equipment with descriptions and values
- The total value of unscheduled hand tools and small equipment
- The value of the largest unscheduled item
- Serial numbers for scheduled property
- Storage and overnight security practices
- Jobsites and geographic operating territory
- Vehicle and trailer storage information
- Rented, leased or borrowed equipment exposures
- Employee-owned tool exposure
- Current coverage and deductibles
- Recent property and equipment loss history
- The desired valuation basis