Contractors rely on their tools and equipment to do their work, but these valuable items are at risk of theft, damage or loss. Contractor’s tools and equipment insurance provides the coverage needed to protect these assets, allowing contractors to focus on their work without worrying about unexpected expenses from lost or damaged equipment.
What Is Contractor’s Tools and Equipment Insurance?
Updated: November 28, 2024
Advertising & Editorial Disclosure
Defining Contractor’s Tools and Equipment Insurance
Contractor’s tools and equipment insurance is a specialized policy that covers the repair or replacement costs for tools, machinery and equipment essential to contractors’ work. It covers the unique risks of mobile and field-based equipment, such as vehicle theft or accidental damage on job sites. Also, it may extend to rented or borrowed equipment.
Unlike general business insurance for equipment, which covers broader business-related items, tools and equipment insurance addresses the needs of contractors and tradespeople. With options like heavy equipment insurance for costly machinery and van tool insurance for mobile tools, contractors can customize their insurance to fit their specific tools and budget requirements.
What Does Contractor’s Tools and Equipment Insurance Cover?
Some of the key coverages of tools and equipment insurance include:
Theft
Tools of trade insurance can protect contractors from losses due to theft, whether it occurs on a job site or while transporting tools. Theft coverage often extends to high-risk situations, including stolen equipment from locked vehicles or construction sites.
Accidental damage
This policy includes accidental damage, covering repairs or replacements for tools damaged during regular use. For example, if a power tool is accidentally dropped and rendered unusable, insurance for tools and equipment can cover repair or replacement costs.
Vandalism
Vandalism can occur unexpectedly, especially on public job sites with limited security. Toolbox insurance offers protection against intentional acts of vandalism, reducing the financial impact of repairs or replacements.
Loss during transit
Van tool insurance ensures that tools are protected between job sites. This coverage is essential for mobile contractors and tradespeople who frequently carry equipment in work vehicles.
Damage from the weather
Certain contractor insurance policies cover damage from weather-related incidents, such as rain or snow, especially if equipment is stored outside.
What Does Contractor’s Tools and Equipment Insurance Not Cover?
Not all incidents qualify for claims under tools and equipment insurance. Some of the major exclusions are:
Normal wear and tear
Tools and equipment insurance doesn't cover damage from regular use over time.
Negligence
Loss or damage resulting from negligence, such as leaving tools unsecured in public areas, is generally not covered.
Intentional damage
Insurance tools policies exclude coverage for intentional damage, where tools are deliberately broken or damaged.
Who Needs Contractor’s Tools and Equipment Insurance?
Tools and equipment insurance is crucial for various professionals and contractors, such as:
General contractors
Contractors working on multiple projects require small business equipment insurance to cover various tools across different locations.
Electricians
Electricians depend on various tools, from hand-held devices to more specialized equipment, and tool insurance offers valuable protection.
Plumbers
With various expensive and specialized tools, plumbers benefit from tool insurance for employees to protect their investments.
Construction companies
Large-scale operations with extensive equipment inventories require commercial equipment insurance for comprehensive protection.
Handymen and repair services
With tools used across various job sites, handymen benefit from tool insurance for financial protection.
Other Types of Insurance to Consider
In addition to contractor equipment insurance, several other policies can further protect contractors and tradespeople from financial losses related to job-site risks. These include:
- Commercial auto insurance: Essential for contractors who transport equipment in vehicles, insurance for business equipment doesn't cover vehicle-related risks. Commercial auto insurance specifically covers damage, liability and theft involving work vehicles.
- Builder’s risk insurance: This covers property and materials used in construction projects, including those at the job site.
- Worker’s compensation insurance: It covers medical expenses and lost wages to protect employees from job-related injuries.
- Commercial property insurance: For contractors who store tools and equipment in specific locations, commercial property insurance covers theft and damage occurring on the premises.
How Much Does Contractor’s Tools and Equipment Insurance Cost?
The cost of insurance for tools and equipment varies based on the type and value of the equipment, as well as the coverage limits and deductibles selected. Contractors with higher-value or specialized tools may pay more due to the increased risk of loss. Insurers also consider factors like tool usage, job-site hazards and the contractor’s claims history when setting premiums.
Rates can also differ based on geographic location and the risk of theft or natural disasters. Contractors in high-risk areas, such as those prone to severe weather or theft, may face higher premiums.
How to Get Contractor’s Tools and Equipment Insurance
Here are essential steps to find the right tools and equipment insurance for contractors:
- 1
Assess your equipment needs
List all tools and equipment that require coverage to determine what type of insurance equipment policy suits you.
- 2
Choose coverage limits carefully
Set realistic limits based on equipment value and replacement costs. Higher coverage limits offer more protection but may result in increased premiums.
- 3
Evaluate deductible options
Compare deductible levels for different policies, as higher deductibles can reduce premiums.
- 4
Review policy exclusions
Understand what insurance equipment policies don't cover, such as wear and tear or negligence.
- 5
Consider additional policies
Evaluate whether other types of insurance, like commercial property insurance, offer extra protection.
- 6
Get quotes from multiple insurers
Compare quotes from top insurance providers to find the best rates and coverage.
FAQ: Contractor’s Tools and Equipment Insurance
What type of business insurance protects you from damage to your equipment?
Business equipment insurance covers damage to tools and equipment, offering protection from theft, accidents and vandalism.
How much does tool insurance cost?
The cost of tool insurance depends on factors like equipment value, policy limits and location. Comparing quotes from providers can help find affordable options.
Does business insurance cover equipment?
Business insurance coverage for equipment includes tools and machinery used in business operations. However, coverage depends on the policy terms and exclusions.
What happens if tools are stolen from a work van?
Van tool insurance covers theft from work vans, protecting contractors from financial loss due to stolen tools. This coverage may include replacement costs based on the policy.
Is weather-related damage covered under contractor’s tools insurance?
Some contractor's equipment insurance policies include weather-related damage, particularly if tools are stored outdoors.
About Mark Fitzpatrick
Mark Fitzpatrick is a Licensed Property and Casualty Insurance Producer and MoneyGeek's Head of Insurance. He has analyzed the insurance market for over five years, conducting original research and creating personalized content for every kind of buyer. He has been quoted in several insurance-related publications, including CNBC, NBC News and Mashable.
Fitzpatrick earned a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He is passionate about using his knowledge of economics and insurance to bring transparency around financial topics and help others feel confident in their money moves.