Key Takeaways
- Contractor's equipment coverage is an inland marine policy that protects mobile tools and machinery wherever they are, which a standard commercial property policy usually does not.
- Scheduled coverage lists high-value items individually, while blanket coverage covers smaller tools up to a per-item maximum.
- Choosing replacement cost or actual cash value valuation has a major effect on what you receive after a loss.
- Rented and leased equipment, employee-owned tools, and rental reimbursement often require separate endorsements, so confirm them before you need them.
Contractor's equipment insurance is a type of inland marine coverage that pays to repair or replace tools, machinery, and mobile equipment that are stolen or damaged at jobsites, in storage yards, or in transit, says the team at Bozzuto Group, a San Diego–based specialty commercial insurance brokerage. It fills a gap most commercial property policies leave open.
Why doesn't commercial property insurance cover your equipment?
A commercial property policy is built around a fixed location. It typically covers buildings and business personal property at the addresses listed on the policy, with only small extensions for property temporarily off-site. For a contractor whose excavator, generators, and power tools spend most of the year at changing jobsites, that is a poor fit.
Inland marine is the insurance category for property that moves or is located away from your premises. The name is historical; it grew out of marine insurance for goods shipped over land. Contractor's equipment, sometimes called an equipment floater, is one of the most common inland marine forms.
General liability will not help either. It covers damage you cause to other people's property, not loss of your own equipment.
What does contractor's equipment insurance cover?
Most forms are written on a broad, open-perils basis, meaning they cover physical loss or damage unless specifically excluded. Common covered situations include:
- Theft of tools or machinery from a jobsite, yard, or locked vehicle.
- Vandalism of parked equipment overnight.
- Fire, windstorm, or flood damage at a site or storage location.
- Overturn or collision of mobile equipment such as loaders or lifts.
- Damage during loading, unloading, or transport between locations.
Coverage depends on the carrier and policy wording, so confirm how your form handles flood, earthquake, and other catastrophe perils if you work in exposed areas.
Scheduled vs. blanket coverage: which do you need?
Most contractors use a combination of both.
| Feature | Scheduled equipment | Blanket (unscheduled) tools |
|---|---|---|
| What it covers | Specific items listed by make, model, serial number, and value | All eligible tools and equipment up to a total limit |
| Typical use | Excavators, skid steers, lifts, trailers, larger generators | Hand tools, power tools, small compressors, ladders |
| Per-item limit | Value stated on the schedule | A maximum per item, often set at a modest amount |
| Maintenance | Must update the schedule when you buy or sell equipment | Less paperwork, but check the per-item cap |
Newly acquired equipment is often covered automatically for a limited number of days and up to a set percentage of your scheduled values. If you do not report the purchase within that window, coverage may lapse.
How is a loss valued?
Valuation determines what you receive after a claim and is easy to overlook when comparing quotes.
- Actual cash value (ACV) pays replacement cost minus depreciation. On a heavily used older machine, that may be far less than what a comparable unit costs today.
- Replacement cost pays to replace the item with new equipment of like kind and quality, usually at a higher premium and sometimes only for equipment under a certain age.
- Stated or agreed value sets the payout in advance, which can help with specialized or older equipment that is hard to price.
Keep scheduled values current. If you insure equipment below its value, some policies apply a coinsurance penalty that reduces your claim payment proportionally.
What gaps should contractors watch for?
- Rented or leased equipment. Rental agreements usually make you responsible for the equipment. Many policies require a separate limit for property of others in your care.
- Rental reimbursement. If a key machine is out of service, this extension helps pay to rent a replacement so the job keeps moving.
- Employee tools. Tools owned by your employees may be excluded unless the policy adds them.
- Unexplained losses. Many forms exclude mysterious disappearance or inventory shortages discovered only during a count.
- Unattended vehicles. Theft from an unlocked or unattended truck may be excluded or subject to conditions such as visible signs of forced entry.
- Wear and mechanical breakdown. Normal wear, maintenance issues, and internal failure are generally excluded. Equipment breakdown coverage may be available for some of that risk.
- Materials for installation. Materials waiting to be installed are better addressed by an installation floater or builder's risk policy.
How can you reduce equipment losses and premiums?
Underwriters reward contractors who can show control over their equipment. Practical steps include GPS tracking on high-value units, keyed ignition systems and immobilizers, fenced and lit storage yards, marking tools with company identifiers, logging serial numbers with photos, and moving small tools off-site at night. A clear check-in and check-out process also makes claims easier to document. When you apply or renew, share these controls with your broker in writing, because underwriters can only credit the protections they know about. A higher deductible on small tools, paired with full limits on major machines, is another way some contractors balance premium against risk.
How Bozzuto Group Helps
We build your equipment schedule with you, confirm values and valuation basis, and structure blanket limits for smaller tools so the per-item cap fits what you actually own. We review rental agreements to make sure leased equipment and rental reimbursement are addressed, and we coordinate this coverage with your builder's risk, auto, and property policies to avoid overlaps and gaps. Our loss control resources can help you put theft-prevention steps in place.
Want your tools and machinery reviewed before your next big job? Call 858-805-1865 or request a quote.
Frequently Asked Questions
Does general liability insurance cover stolen tools?
No. General liability covers injuries and property damage you cause to others. It does not cover loss of your own tools or equipment. For theft or damage to your tools and machinery, especially at jobsites, you typically need contractor's equipment coverage, which is a type of inland marine insurance, or a tools endorsement on another policy.
What is inland marine insurance for contractors?
Inland marine insurance covers property that moves or is located away from your main premises. For contractors, the most common form is contractor's equipment coverage, which protects tools, machinery, and mobile equipment at jobsites, in storage, and in transit. Related forms include installation floaters and builder's risk for materials and structures under construction.
Are rented tools and equipment covered by my policy?
Not always. Many contractor's equipment policies cover only property you own unless you add a limit for rented or leased equipment. Because rental agreements usually make you responsible for loss or damage, check your policy for a leased or rented equipment limit and confirm it is high enough for the most expensive item you typically rent.
What is the difference between scheduled and unscheduled equipment?
Scheduled equipment is listed individually on the policy with a description, serial number, and value, which suits large machines. Unscheduled, or blanket, coverage protects all eligible smaller tools up to a total limit, usually with a maximum amount per item. Most contractors combine both so high-value items are specifically insured and small tools do not need to be listed.
Are my employees' personal tools covered?
Often they are not covered automatically. Many contractor's equipment forms exclude property owned by employees, or include only a small sublimit. If your workers bring their own tools to jobs, ask whether your policy can add employee tools coverage and at what limit, so a theft from a jobsite does not leave your crew uninsured.