For most contractors, tools and equipment represent a significant investment — and a critical business asset. Without your tools, you cannot work. Without insurance, a theft or loss can put you out of business.
Here is what tools and equipment insurance covers, what it does not, and how to make sure your gear is properly protected.
What Tools and Equipment Insurance Covers
Tools and equipment insurance (also called inland marine or contractor's equipment coverage) covers your tools and equipment against:
Theft. Tools stolen from your truck, trailer, job site, or storage facility. This is the most common claim for contractors.
Vandalism. Intentional damage to your equipment.
Fire. Tools and equipment damaged or destroyed by fire.
Accidental damage. Damage from drops, impacts, or other accidents.
Natural disasters. Wind, hail, flooding (check your policy — flood coverage varies).
Coverage typically applies wherever your tools are — on the job site, in your truck, in storage, or in transit.
What Tools and Equipment Insurance Does NOT Cover
Wear and tear. Normal deterioration from use is not covered. Insurance is not a maintenance contract.
Mechanical breakdown. If a tool fails due to a mechanical defect or normal wear, that is not a covered loss. Equipment breakdown coverage is a separate product.
Employee theft. Standard tools and equipment policies typically exclude theft by employees. If employee theft is a concern, ask about crime coverage.
Tools left in an unlocked vehicle. Many policies exclude theft from vehicles that were not locked. Always lock your truck.
Rented or borrowed equipment. Your tools and equipment policy covers equipment you own. Rented or borrowed equipment may need separate coverage — check with your rental company and your agent.
Coverage Limits and Scheduling
Tools and equipment coverage can be structured in two ways:
Blanket coverage: A single limit covers all your tools and equipment up to the policy maximum. Simpler to manage but may not be sufficient for high-value individual items.
Scheduled coverage: Individual high-value items (excavators, lifts, specialty equipment) are listed with their own coverage limits. More precise but requires keeping the schedule updated.
For most contractors, a combination works well: blanket coverage for hand tools and small equipment, scheduled coverage for major equipment.
How Much Coverage Do You Need?
Take an inventory of your tools and equipment and estimate their replacement cost. Common benchmarks:
- Handyman/light trades: $5,000–$25,000
- Plumber/electrician/HVAC: $25,000–$75,000
- General contractor: $50,000–$200,000+
- Heavy equipment operator: $200,000–$1,000,000+
Do not underinsure. If your tools are stolen and your coverage limit is $10,000 but your actual tools are worth $30,000, you absorb the $20,000 difference.
Deductibles and Premium
Tools and equipment insurance typically has a per-occurrence deductible of $250–$1,000. Higher deductibles mean lower premiums. For contractors who want to avoid filing small claims (which can affect their insurability), a higher deductible makes sense.
Annual premiums for tools and equipment coverage typically run $300–$1,500 for most contractors, depending on the value of equipment covered.
Job Site Security and Premium Reduction
Carriers reward contractors who take steps to reduce theft risk:
- Locking storage. Locked job boxes and trailers reduce theft risk and may reduce premiums.
- GPS tracking. GPS trackers on high-value equipment improve recovery rates and may qualify for premium discounts.
- Engraving and marking. Marking tools with your business name or a unique identifier makes them harder to sell and easier to recover.
- Inventory records. Maintaining serial numbers and photos of your equipment supports claims and demonstrates good risk management.
The Bottom Line
Your tools are your livelihood. Tools and equipment insurance is one of the most cost-effective coverages a contractor can carry — the premium is modest relative to the value of the equipment it protects.
Talk to a RightQuote advisor about contractor insurance, or explore business insurance options.
Part of the Contractor Insurance Guide.