Paige Cerulli Last Updated On: July 18, 2024

Insurance For Tools and Equipment

When you run a construction business, your business depends on some valuable equipment to operate. Tools and equipment insurance can help protect your investment in that equipment.

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What is Tools and Equipment Insurance?

Tools and equipment insurance is a specialized form of insurance that protects the tools you use in your business. Sometimes called contractors equipment insurance, the policy will pay to replace or repair covered tools that are stolen, damaged in an accident, or vandalized.

This specialized tools insurance is a form of inland marine insurance, which protects your tools as they are moved between job sites. It also protects the tools while they’re used and stored at job sites, whereas most other inland marine policies only cover your items while they’re being transported.

What Does Tools and Equipment Insurance Cover?

This business equipment insurance generally covers tools and equipment with an individual value under $10,000. Most insurance companies require the items to be less than five years old. In most cases, these policies provide insurance on tools that are movable, including power tools, hand tools, clothing and protective gear, and miscellaneous equipment like lighting, tool boxes, and ladders.

While it’s important to read the coverage outlined by your policy, most small business equipment insurance covers certain types of incidents:

  • Tools that are stolen while in transit or from a worksite, a business, a client’s home, or a storage unit
  • The cost of repairing a piece of equipment that was broken, as long as the damage was not the result of normal wear and tear
  • The cost of removing graffiti or repairing other damage that was caused by vandalism

You may also find a policy that covers equipment that your business is renting. These policies may cover damage to a piece of equipment that you’re renting, or they may cover the cost of renting equipment until the damaged equipment you own can be repaired.

What Doesn’t Cover?

Most policies won’t cover tools and equipment with an individual cost of more than $10,000, though you may find some insurance companies willing to cover more expensive equipment like backhoes and bulldozers. Additionally, while this coverage will pay for expenses related to vandalism, theft, and damaged equipment, it won’t pay for damage caused by:
  • Rust and corrosion
  • Normal wear and tear
  • Mechanical flaws

How Much Does Tools and Equipment Insurance Cost?

The cost of tools and equipment insurance for small business use depends on several factors. Policies tend to have affordable monthly rates, but your coverage limit and the number and value of the tools you insure will affect your costs. Your location plays a role, too, and you can expect to pay more if you operate your business in an area that’s prone to theft. Insurers will also review your claims history. If you have numerous reported claims on your record, insurance companies will charge you higher premiums.  

Since costs depend on so many specific factors, getting tools and equipment insurance quotes will give you the best idea of what you’ll pay for coverage.


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