Article Reviewed by a licensed insurance professional: Sam Meenasian (CA dept of insurance license #0F75955).
Estimated reading time: 4 minutes
Equipment Floater Insurance, often called a contractor’s equipment floater or tools-and-equipment coverage, is designed to protect valuable equipment that moves between job sites. Unlike a standard commercial property policy, which is often tied to a specific premises, an equipment floater is typically written as inland marine coverage that can follow your equipment while it is being transported, stored temporarily, or used off-site.
Because construction and specialty trades rely on mobile assets every day, this coverage can be a practical part of a contractor’s risk management plan. It helps reduce the financial impact of a covered loss so projects can continue with less disruption.
What Does Equipment Floater Insurance Cover?
Most equipment floaters are intended to cover direct physical loss or damage to mobile tools and equipment at job sites, in transit over land, and sometimes at temporary storage locations.
Covered property often includes:
- Hand and power tools (for example, drills, saws, compressors)
- Mobile equipment and machinery (for example, skid steers, forklifts, excavators)
- Other contractor equipment that is moved from location to location
Common covered causes of loss include theft, fire, and vandalism, plus other causes depending on whether the policy is written on a named-peril or special-form basis. Always review the causes of loss section and endorsements to confirm what is included and what is excluded.
What Equipment Floater Insurance Often Does Not Cover
- Licensed vehicles (work trucks, vans, and cars). These are typically insured under commercial auto.
- Third-party liability (injury to others or damage to someone else’s property). That is usually handled by general liability insurance.
- Wear and tear, breakdown, or maintenance-related issues. Mechanical failure is often excluded unless you carry separate equipment breakdown coverage.
- Certain catastrophic perils (for example, flood or earthquake) unless specifically endorsed.
Policies may also include conditions and sublimits, such as limits for theft from unattended vehicles or requirements for secured storage. Ask your agent to walk you through these details before binding coverage.
Why Contractors Buy Equipment Floaters
Contractors buy this coverage to reduce the financial shock of losing equipment that keeps work moving. A major theft or fire loss can cause downtime, replacement delays, and unexpected cash strain. An equipment floater can help pay for covered repair or replacement costs, subject to the policy’s deductible, limits, valuation method, and claim approval.
In some cases, project owners, general contractors, or lenders may require evidence of tools and equipment coverage, especially when high-value equipment is used or financed. Requirements vary by contract, so it is smart to review insurance requirements early.
How Equipment Floater Claims Work in Real Life
Here are two realistic examples, written in a claims-accurate way.
Theft from a job site: If a contractor’s excavator is stolen and theft is a covered cause of loss, the policy may pay to repair or replace it up to the scheduled limit, minus the deductible. Payment depends on the valuation terms (actual cash value vs. replacement cost) and the documentation.
Damage while transporting equipment: If a piece of equipment is damaged in transit, the floater may respond if transit and the cause of loss are covered. This is typically a first-party property claim, not a liability claim.
How Much Does Equipment Floater Insurance Cost?
Pricing depends on the equipment and risk profile, including:
- Total equipment value and whether items are scheduled or blanket
- Equipment type, age, and theft attractiveness
- Jobsite conditions and where equipment is stored after hours
- Deductible level and coverage limits
- Prior loss history
Many insurance carriers rate this as a premium based on the equipment’s value, with minimum premiums and underwriting requirements. The best way to get an accurate number is to provide an equipment list with values and serial numbers and request quotes from multiple carriers.
