Why Contractors Need Tools and Equipment Insurance
Construction site theft is big business for thieves. A big risk that you face as a contractor is the theft of your tools and equipment from a job site or your shop.
Tools and equipment insurance for contractors covers a wide range of items if they’re stolen, lost, vandalized, or damaged by fire, water, or a natural disaster. It’s a great way to protect yourself as a contractor.
What is tools and equipment insurance?
Any item valued below $1,500 a tool. An item worth more than $1,500 is considered to be equipment.
When you apply for tools and equipment insurance coverage for your construction business, add up the value of the tools and equipment that you or your small business own so that your insurance provider has that information.
Tools and equipment insurance can also be called contractor equipment insurance.
Examples of tools
- Hand tools such as hammers, screwdrivers, pliers, hand saws, and utility knives
- Power tools such as electric drills, circular saws, belt sanders, and nail guns
- Measurement items such as tape measures, rulers
- Safety gear such as hard hats and safety glasses, fluorescent vests, and steel toe boots
- Tractors, bulldozers
- Backhoes, pavers
- Graders, excavators
- Cement mixers
Examples of equipment
What doesn’t tools and equipment insurance cover?
Tools and equipment insurance does not cover damage due to wear and tear, damage done on purpose, or cover building materials for your project. To cover materials, you may need installation floater insurance.
Equipment breakdown insurance typically covers damage due to mechanical breakdowns, electrical shorts, or power surges.
How does tools and equipment insurance protect you?
- You’ve left your hand tools at a job site and they were stolen. Contractor equipment insurance can help cover the cost to replace the stolen tools.
- Your bulldozer was vandalized at a job site. Tools and equipment insurance will help cover the costs of repairing your contractor business’s bulldozer.
Tools and equipment insurance also extends coverage whether your tools and equipment are in storage, in transport, or left at a client’s location.
Who else needs tools and equipment insurance?
Carpenters, plumbers, roofers, landscapers, welders, deck and fence builders, drywallers, painters, among others.
How much does tools and equipment insurance cost?
How much tools and equipment insurance will cost depends on the value of your tools and equipment, your location, number of employees, annual revenue, and any past claims.
What other kinds of business insurance do contractors need:
- Commercial general liability insurance
- Commercial property insurance
- Course of construction insurance
- Business interruption insurance
- Pollution insurance
- Errors and omissions insurance
Commercial vehicle insurance is important
When you or your employees are on the road travelling to a job site, commercial vehicle insurance may cover your vehicles in the case of an accident. Your personal vehicle insurance will not cover you in the case of an accident if the work is related to your work as a contractor.
Here’s an insurance checklist for your contractor business:
Do you have the best business insurance rate for your type of business?
Do you have the right amount for your deductible and regularly review it to make sure it’s the right amount for you?
Are you or your employees using personal vehicles for work?
5 FAQs
Why do contractors need insurance?
Contractors face risks on every project, including property damage, third-part bodily injury, theft, equipment breakdown, and professional errors. Insurance provides essential financial protection, covering the costs of accidents, legal claims, equipment replacement, and property repairs. Without insurance, a contractor would need to cover all these costs out of their own pocket.
How can insurance help contractors win more jobs?
Insurance, especially commercial general liability insurance, shows clients that you are responsible and prepared for unforeseen risks, such as a lawsuit or third-party (client/supplier) injury or property damage. Having insurance builds trust and credibility and will make clients more likely to choose an insured contractor.
How does insurance coverage for tools and equipment help contractors?
Having tools and equipment insurance means you can quickly repair or replace damaged or stolen items, keeping projects on schedule and reducing the risk of costly delays. This type of insurance also shows that you are a professional and are able to manage risk. It will give you an edge over uninsured competitors.
Is tool and equipment theft common in the construction industry?
Tool and equipment theft is a significant and widespread problem in the Canadian construction industry. Portable power tools, such as drills and saws, are frequent targets due to their ease of theft and high resale value. Heavy machinery like skid steer loaders, backhoes, and excavators are also commonly stolen, despite their size.
Is it possible to put tracking equipment on tools and construction equipment?
It is increasingly common to put trackers on tools and construction equipment. Modern GPS tracking technology allows contractors to monitor the real-time location of both heavy machinery and smaller, portable tools across multiple job sites. Trackers can send alerts if equipment leaves a designated area, helping contractors respond to unauthorized movement and increasing the chances of recovering stolen assets.