What Does Tools & Equipment Insurance Cover?
As a contractor, keeping up with tools on every project is a big part of your job. This is a difficult task because of construction moving forward and the constant changing of equipment. As a result, it is not uncommon to lose these items.
Because of this, it is important to make sure you have insurance coverage for these tools.
Find out what contractor tools and equipment insurance is, what the policy covers, and how software will track what tools have coverage.
What is Tools and Equipment Insurance?
For the most part, tools and equipment insurance is a policy for contractors that covers your tools and equipment on different job sites. The policy covers lost, stolen, or damaged tools.
Here are some important things that must be remembered about this coverage:
- The tools must be less than five years old.
- Coverage does not apply to general wear and tear, like paint chipping.
- This coverage only applies to moveable tools and equipment.
What Does Insurance for Tools & Equipment Cover?
Insurance for tools and equipment covers small items under $10,000 like hammers, screwdrivers, nail guns, etc.
In most cases, the policy covers:
- Broken equipment
- Lost items
- Damage to rental equipment
For example, commercial property coverage covers your tools when you store them at your primary office location. When you move the tools to a job site, they are no longer covered. In that case, this is where tools and equipment coverage kicks in. Tools are most stolen from construction sites and at this time “construction site theft costs the industry up to $1 billion each year,” according to Amarok a perimeter security solution.
Tools and equipment insurance will ensure coverage for your equipment when it is on its way to a construction site, on a site, or when away from your main location.
I Have A Lot of Tools, How Do I Know What’s Covered?
At any rate, the best way to track what tools you have insurance coverage for is with a certificate of insurance (COI) tracking and management software.
COI tracking software allows you to upload documents and sends reminders when they need updating. Learn more about insurance coverage for contractors and how to keep track of insurance.
Why Do I Need This Coverage?
If you are a self-employed subcontractor, you will not receive coverage under your household insurance.
Tools and equipment insurance is inexpensive and comes as part of a tradesman’s insurance package. Knowing your tools and equipment qualify for repair or replacement from damage or theft gives you peace of mind. Having this coverage also assures you can get back to work.
Restrictions of this Insurance
Tools and equipment insurance covers accidental damage to the tools or losing the tools because of theft. It does not cover breakdown or mechanical failure. Above all, it is not an extended warranty.
As has been noted, there are coverage restrictions on these policies. It is worth checking your policy to find out what those restrictions are because the theft of tools from vans overnight is common. Some insurers exclude all claims when the tools and equipment are left in an unattended road vehicle.
Unless tools are stored in a locked storage facility, they will not receive coverage if stolen.
There may also be geographical limits in your tools and equipment insurance policy. If you work abroad, check your policy to see whether coverage will still apply.
How to Make the Most out of this Insurance?
To make the most out of this insurance coverage, you should investigate coverage for rented items. Rented items have the same coverage as your personal ones.
This is important to investigate because if there is a loss and you are left to pay for your rented time with the tools, coverage could kick in and pay for it.
Lastly remember, insurance is on your side if you have the right tool to track your coverage. For more free, easy-to-understand, and quality information, sign up for the monthly SmartCompliance newsletter.