What Is Contractors Equipment Insurance?

Hoffman Hanono
August 17, 2023

You’ve worked hard to develop your business. And naturally, you want to protect that business. You’re likely careful about maintaining liability and workers’ compensation insurance, but there’s another critical policy you might be forgetting: contractors equipment insurance. This coverage protects your equipment in the event of damage, loss, or theft.

What’s the Importance of Contractors Equipment Insurance?

Contractors equipment insurance is essential when it comes to protecting your investments. Suppose that a $3,000 set of tools is stolen. You will have to pay out of pocket to replace those tools without coverage.

Even if your business is doing well, an unexpected significant expense like this is problematic. But if you have the right coverage, your insurance provider will pay to replace the stolen tools.

Contractors equipment insurance is sometimes called “tools and equipment insurance.” It isn’t typically offered as a standalone policy; instead, you might include it as an add-on when you purchase builder’s risk insurance, workers’ compensation insurance, or a similar one.

While you will have to pay monthly insurance premiums, the cost of these premiums is a fraction of what it would cost to replace expensive or specialized tools.

What Does Contractors Equipment Insurance Cover?

When you take out a policy, you will typically need to list all the equipment you want covered, including serial numbers. Contractors equipment insurance will usually only cover items under $10,000. More valuable pieces of equipment may require a separate policy.

These are some of the most commonly covered tools and equipment:

  • Nail guns
  • Circular saws
  • Sanders
  • Forklifts
  • Hand tools
  • Skid loaders

Most of these policies will cover your equipment if it sustains weather damage, is lost or stolen, is vandalized, or is accidentally damaged.

Ensure you know whether your policy will cover the actual cash value (ACV) or the replacement cost. An ACV policy will pay you only what the depreciated equipment is worth, but a policy that covers replacement costs will pay for a new version of the same make and model.

What Does Contractors Equipment Insurance Not Cover?

This type of insurance is designed to cover most or all of your tools or equipment. However, there are some exceptions:

  • Older Equipment: Some policies won’t cover equipment over a certain age (usually five years)
  • Equipment Not Listed as Covered: Some policies cover only specific types of equipment (and often, equipment under a particular value)
  • Newly Purchased Equipment: If you buy a piece of equipment after your policy goes into effect, you may need to add it to your policy explicitly

Different policies may have slightly different terms. However, the importance of contractors equipment insurance can’t be overstated — it’s a way to protect the business you’ve worked so hard to build.

Protect Your Business With Hoffman Hanono

At Hoffman Hanono, our knowledgeable agents will review policies with you to ensure you get the coverage you need. Since 1959, we’ve been proudly serving businesses in San Diego and surrounding areas. Whether you need contractors equipment insurance or any other type of insurance to protect your business, we can help! Reach out to us to connect with an agent today.