What Does Tools & Equipment Insurance Cover?
Tools and Equipment Insurance is vital for anyone that works in the construction industry.
As a contractor, you have tools and equipment spread out through various construction sites. Because of this, it is important to make sure you have insurance coverage for these tools.
Find out what contractor’s tools and equipment insurance is, what the policy covers, and how to keep track of what tools have coverage.
What is Tools and Equipment Insurance?
Tools and equipment insurance is a policy for contractors that covers their tools and equipment on different jo sites. The policy covers lost, stolen, or damaged tools.
Here are some important things to note about this coverage:
- The tools usually must be less than five years old.
- General wear and tear, like paint chipping, is not covered.
- This coverage only applies to moveable tools and equipment, meaning anything stationary does not have coverage.
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 by your commercial property coverage. This is when you need tools and equipment coverage.
Tools and equipment insurance will ensure coverage for your equipment when it is in transit to a construction site, being used on a site. or when it is stored away from your primary location.
I Have A Lot of Tools, How Do I Know What’s Covered?
The best way to keep track of what tools you have insurance coverage for is with a certificate of insurance (COI) tracking and management software.
A COI tracking software allows you to upload documents and sends reminders when it needs updating. Learn more about insurance coverage for contractors and how to keep track of insurance.
If you have any particularly expensive items, it is a good idea to check your insurance to make sure there is not a single item limit that would mean the item is not fully covered. You are usually able to increase this limit for a small additional premium if you need to do so.
Why do I Need this Coverage?
If you are self-employed, it is unlikely your tools will be covered by your household insurance because they are items that you use in your business rather than personal items.
Tools and equipment insurance is usually relatively inexpensive and comes as part of a tradesman’s insurance package. Knowing that your tools and equipment will be repaired or replaced by your insurer quickly if they are damaged or stolen gives you peace of mind, and if you do need to make a claim, it will not be long before you can get back to work.
Restrictions of this Insurance
Tools and equipment insurance only covers accidental damage to the tools or the loss of the tools due to theft. It does not cover breakdown or mechanical failure. It should not be viewed as an extended warranty.
There are often coverage restrictions when the tools are left in unattended vehicles. 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.
Coverage will not usually apply if the tools are stolen from a worksite unless they were stolen from a secure, locked storage facility.
There may also be geographical limits in your tools and equipment insurance policy, so if you work abroad, you should 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 hired or rented items. These rented items are covered just as your personal ones are.
This is great to investigate because if there is a loss and you are tied into a contract and left to pay for your rented time with the tools, coverage could kick in and pay for this lost time.
Remember, insurance is on your side if you take the time to do the proper research. For more free, easy to understand, and quality information, sign up for the monthly SmartCompliance newsletter.