What is contractor’s equipment insurance?
Contractor’s equipment insurance is an inland marine insurance policy that caters to the needs of commercial contractors. Commercial property insurance covers your equipment, but only while it’s on your property. Once equipment leaves your property, any theft or damage will not be covered by your property insurance policy, so contractor’s equipment insurance can protect you if you travel with your tools and equipment (which about every contractor does).
Who Needs It?
Contractors and construction companies lose billions annually to theft and vandalism. More is lost to weather or fire-related damage. Any specialty tradesperson or contractor that travels with tools or equipment should have contractor’s equipment coverage.
If you store your tools in a trailer that travels from with you from site to site and job to job, that trailer carries your livelihood in it, but isn’t covered by property insurance when it is off of your property.
If you live or work in an area with a high crime rate, you should especially consider insuring your equipment, particularly against theft.
Contractor’s equipment insurance policies are broad and highly customizable, due to the variety of demand by different contractors. Often, equipment that is owned, rented, leased or borrowed is all covered, but policies vary.
Your policy will cover any variety of equipment from scaffolding to generators/compressors to heavy equipment (backhoes, bulldozers, excavators, etc.). Smaller equipment such as standard hand tools and pneumatic tools are also covered. Employee tools and clothing can also be covered.
Many contractors have specialized or custom tools. Since these are often hard to value and replace, many policies include miscellaneous coverage with item and occurrence limits.
Cleanup and Expedition
In the event of a covered claim, contractor’s equipment coverage can also help pay for the removal of debris and cleanup after an accident. Contractors insurance can also help pay the costs to expedite a project that is off schedule as the result of a covered loss.
Types of Coverage
There are two types of coverage offered for contractor’s insurance policies. Scheduled coverage applies only to items in the policies “schedule.” Simply put, you have to list everything that you want protected. Blanket coverage on the other hand covers all items that fit a definition of “covered property” in your policy, regardless of any specific list.
You can also have a policy that is a combination of the two. You will provide your insurer with a list of tools and equipment that you want covered and, in addition, your policy will cover unlisted items up to a specified limit.
You can also add an endorsement with an updated schedule with newly purchased or rented equipment. Some policies will include an automatic grace period of coverage for new items, so that you have coverage while you update your policy.
Types of Payout
Losses may be paid out according to one of two valuations: the cash value of the damaged property or the cost to repair or replace the item. Coverage based on the replacement value of the property provides better but more expensive protection.
What’s Not Covered?
Due to the flexible and broad nature of contractor’s equipment insurance policy, it’s hard to say what isn’t covered. Some insurers won’t cover cranes or cranes over a certain size. Some insurers don’t include employee clothing or personal tools. Some policies may exclude certain types of damage.
There is typically blanket coverage with a list of specific exclusions, which may include, but are certainly not limited to: Nuclear hazard, war, civil unrest or acts by a civil authority, damage caused intentionally by you or an employee, and certain forms of wear and tear.
To know exactly what’s included in your policy or any policy you’re considering, be sure to ask your insurance agent and ensure that you’re getting the right policy for you.
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