Article Reviewed by a licensed insurance professional: Sam Meenasian (CA dept of insurance license #0F75955).
Estimated reading time: 6 minutes
Key Takeaways
- Contractors must prioritize tools and equipment security, as theft and damage can lead to significant financial loss.
- Tools and equipment insurance covers theft, vandalism, and certain types of damage, providing necessary protection for contractors.
- Auto insurance typically does not cover tools; contractors need specific inland marine or tools & equipment coverage.
- Costs for tools & equipment insurance vary, but proactive measures can help keep premiums low.
- Investing in tools & equipment coverage protects your business and ensures you can continue working after a loss.
Electricians, plumbers, and many other kinds of contractors all work with their hands all day long. This means that you are aware that your tools are just as important as your health when it comes to your job security. You probably take great care of your truck, providing it with maintenance and upkeep that keeps it working hard for your business. But what about the gear that you use for every job that you complete? Are you protecting it properly?
All contractors who work with their hands should be realistic about this fact: without your tools, your truck is just an expensive place to store business items.
The Real Cost of Losing Access to Your Tools and Equipment
Let’s use an example to clarify this point. You arrive at a job site with your coffee in hand at 7 a.m. You are ready to work hard all day long. You open up your truck, and you realize that all of your tools have been stolen overnight. Replacing stolen tools could cost thousands of dollars quickly, and specialized trades often carry higher-value equipment. Your best move is to total up replacement costs and ensure that you value.
And theft is not the only possible risk to your tools and equipment. Fires, vandalism, and even the weather can cause you to lose access to critical equipment and tools that you need to stay in business.
Tool and equipment theft remains a persistent risk for contractors. Industry estimates and insurer data show losses could be significant, especially for higher-value equipment, so it’s worth verifying you have the right property coverage for mobile tools.
Why You Can’t Lean on an Auto Insurance Policy
Commercial auto insurance generally covers the vehicle itself. Tools and loose equipment typically need inland marine/tools & equipment coverage, while permanently attached equipment may need to be insured via commercial auto (or specifically listed/endorsed, depending on the carrier).
What Does Tools & Equipment Insurance Cover?
Here is what is included in a tools & equipment policy:
· Coverage for theft and vandalism. Tools & equipment coverage may cover theft from a job site or vehicle, but coverage often depends on policy conditions (for example, locked storage, signs of forced entry, and specific sublimits).
· Many policies may cover perils like fire and theft, but some weather-related losses (including flood, earthquake, and hurricanes) may be specifically excluded from the policy. Review your covered causes of loss.
· Coverage to replace damaged or stolen tools. Policies may settle claims on replacement cost or actual cash value, depending on the form and endorsements. Confirm scheduled equipment and tools valuation before you purchase, so there are no surprises when a claim needs to be filed.
· Temporary job site coverage, which makes sure that you have the protections that you need, even miles away from home.
This kind of coverage offers the peace of mind you need to do business without worrying about losses.
Real-World Example: A Roofer Lost $18,000 Overnight
It’s no secret that roofing is a high-risk niche to work in. However, falls and injuries are not the only risks in this space. Imagine being a roofer in Kansas City who suffered a break-in overnight. A thief stole his ladders, safety gear, nail guns, and everything. Worst of all, he didn’t have the kind of coverage he needed to protect himself from theft of business tools and equipment. He had to cover the loss out of pocket.
This kind of loss is reported to insurance companies all over the US daily. If you don’t have the right coverage in place, insurance may not reimburse the loss, but you should still file a police report, document the stolen items, and check whether any other policies (property, crime, or auto endorsements) might apply.
The Hidden Costs of Saving Money on a Tools & Equipment Policy
You might think you are saving money by refusing this kind of coverage when you get the rest of your business insurance policies. You need to remember that you may not only lose tools that need to be replaced, but you might also be out of work until you can afford new equipment, you might have to cancel jobs, and you might lose customers who get tired of waiting for you to get back to work.
These costs can all add up, and suddenly, you aren’t just out of money to replace your equipment. You might lose your entire business overnight, simply because you wanted to save a few hundred dollars annually.
How Much Will My Tools & Equipment Coverage Cost?
Thankfully, tools & equipment coverage isn’t that expensive. Costs vary by trade, location, and the value of your tools. Many small contractors may see tools & equipment coverage premiums starting from a few hundred to a couple of thousand dollars a month, while higher limits/specialty equipment could push premiums higher.
How to Keep Premiums Low
There are a few steps that you can take to make sure that your tools and equipment insurance is affordable each year:
1. Engrave or label your tools. Thieves are much less likely to take labeled tools.
2. Make sure to park in well-lit areas to discourage break-ins.
3. Make sure to have an updated inventory list of your equipment, along with photos and serial numbers.
4. Use lockable storage boxes and have GPS trackers in your trucks or trailers.
5. Be sure to bundle your policies where possible to save money.
Key Takeaways:
1. Your tools are as important to your business as your vehicle. Protect them both.
2. Your general liability policy won’t cover your tools or your equipment.
3. Theft and damage claims are increasingly common all across the US.
4. When you have insurance coverage to protect your business, you suffer less downtime after an issue, and you will get back on your feet much sooner.
5. Your tools & equipment policy may be far more affordable than you think
We Recommend Tools & Equipment Coverage For Your Business
At USA Business Insurance, we provide coverage for trades of all kinds. We work with plumbers and welders as well as painters, HVAC techs, and handymen. All of these businesses need the proper insurance protections, and we can offer them the right policies to care for them. Whether you need solo operator insurance or policies to cover a huge business with a full staff, we can help.
Give us a call and let us help you to protect your livelihood in a smart and affordable way.
