Alternate names: Contractors equipment insurance, commercial contractors equipment insurance, equipment floater insurance
Equipment insurance policies can cover small or large tools, rented or borrowed equipment, work-related clothing, and more. For example, let’s say a general contractor is working on a remodeling project at a house in a suburban development. The contractor typically leaves their tools at the worksite. But one night, the house is broken into and their tools are stolen. The contractor can file a claim on their equipment insurance policy to recoup the value of the covered tools. Equipment insurance covers tools and equipment when they are located at a specific worksite or while in transit from one site to another. The types of equipment covered by equipment insurance policies can include bulldozers, road graders, forklifts, loaders, backhoes, concrete mixers, tools, and more. If a loss is covered, equipment insurance often will also pay for other costs, such as accident cleanup and debris removal. The policy may also pay for additional services or supplies needed to keep the work project on schedule. Some equipment insurance policies even reimburse businesses for the cost of a reward that leads to the return of lost or stolen equipment or to the arrest of whoever stole or damaged it. Policies can either pay for replacement costs or the actual cash value (ACV) of the equipment. Replacement cost policies will reimburse contractors for the repair or replacement of damaged property with equipment of a similar age, condition, and quality. ACV policies reimburse for the replacement costs of the property at the time of the loss minus depreciation.
Types of Equipment Insurance
There are several types of equipment insurance coverage. Scheduled coverage will include a specific listing of the equipment that is being insured. In some cases, additional equipment can be added to the list after the policy becomes effective. Blanket coverage will cover any property that is in a category mutually agreed upon by the business owner and the insurer to be “covered property.” Another type of coverage is a combination of both scheduled and blanket that may include scheduled coverage for more expensive items—say, those over $5,000—and blanket coverage for lower cost items. Equipment insurance can also include equipment breakdown insurance. Once known as boiler and machinery insurance, it is one of the core coverages in a business owner’s policy (BOP). Equipment breakdown insurance protects your company’s mechanical, electrical, and computer equipment from unexpected breakdowns. It covers five categories of equipment: mechanical, electrical, computers and communication systems, air conditioning and refrigeration systems, and boilers and pressure equipment. In addition to covering repair and replacement costs, most policies also will cover time and labor costs, lost income, spoiled inventory, and other expenses incurred during the restoration period. Business property can be covered under a commercial property policy, but these policies often exclude coverage for property that moves from location to location. If your business depends on your ability to use certain tools and equipment, it’s important to ensure they are covered.Auto policies for a business often exclude coverage for mobile equipment. In general, “special mobile equipment” such as earthmovers, tractors, and forklifts are not considered automobiles for insurance purposes because they are not primarily used for transporting people.
