What Is Contractor Equipment Insurance?
As a construction contractor, you need a lot of equipment to do your job properly. Most contractors know that they will need a few different insurance types to protect themselves from liability and litigation.
Despite this, many contractors are surprised that certain equipment types are not always covered under standard commercial property insurance policies when transported from job site to job site.
Due to the nature of the industry, contractors face a lot of risks, and any significant loss of equipment could put a contractor out of business.
Your equipment is a valuable asset that is necessary for completing your projects. Thankfully, contractor equipment insurance can help you protect yourself from facing the financial burden of repairing or replacing your lost or damaged equipment on your own.
The Basics of Contractor Equipment Insurance
Contractor equipment insurance, also known as equipment floater insurance, is a broad-range coverage, often added to your commercial insurance policy, that is designed to protect against damaged or missing equipment during their transportation. These types of policies provide coverage for any physical damage and loss to mobile machinery and equipment. You are also able to customize your policy to get the exact amount of coverage you need.
Depending on your coverage, you can extend it to cover clothing or small tools. Carpentry and plumbing companies can benefit from this type of coverage because they carry their tools to every client site that they visit. Coverage can start at $50 a year for up to a $10,000 limit, which is well worth it for most contractors.
If you have a commercial policy, your equipment (up to a specific value) is usually protected as long as it stays in a fixed location. But equipment that is mobile or travels with a contractor will not be covered, such as:
- Bulldozers, forklifts or concrete mixers
- Hand tools and other spare parts
- Generators, compressors, or cables
- Derricks and draglines
What is covered under Contractor Equipment insurance?
Typically, contractor equipment insurance will cover tools and equipment up to the replacement cost. The exact coverage will depend on your specific policy, as it can vary.
Most contractor equipment policies will be written on an “all-risk” basis where all perils except those explicitly excluded by the policy terms are covered. These policies usually protect your equipment from various damages, including fires, theft, floods, equipment repairs, vandalism and others. This coverage will continue as equipment moves from site to site.
Blanket Coverage or Scheduled Coverage
When shopping around for contractors’ equipment coverage, it usually provides blanket coverage, scheduled coverage, or both. Before purchasing your policy, you should be sure that you understand these options.
Scheduled coverage only applies to items listed in an agreed-upon schedule. A list of detailed items is attached to the original policy or kept with the insurer. Most of the time, you can add newly purchased equipment to the coverage after drafting the policy.
This type of coverage applies to any items which fall under an agreed-upon definition of “covered property.” Your property will be protected whether or not it is listed in a schedule provided it falls within the agreed upon parametres of the schedule.
To ensure proper coverage, most contracting companies use a blend of scheduled and blanket coverage. When you are purchasing a policy, be sure to speak with your insurance broker about what types of tools and equipment you need protecting. You should provide as much information as possible, such as the equipment’s make, model, serial number and estimated value.
Other Things to Consider with Contractor Equipment Insurance
When evaluating different policies, you should also look for the following elements of coverage. Some of these might already be covered in a policy. You might have to add others through an endorsement, depending on your needs.
Employee Tools and Clothing
Your contracting company might require your workers to buy their clothing and tools. You’ll want to make sure your employees are protected in your contractors’ equipment policy as well. It will depend on your policy’s specifics, but there is a good chance that it will also be covered. Your policy will determine how much your insurance company will pay.
Equipment Borrowed, Leased or Rented
As a contractor, it might not make sense in some cases for you to own all of your equipment. In some cases, your business might rely on leasing, borrowing or renting your equipment from someone else.
Once you lease equipment, it typically makes you responsible for any damage that occurs during the lease. Thankfully, many contractors’ equipment policies will include coverage for the equipment you lease.
If your rental equipment becomes damaged, most insurance companies will cover the additional expenses related to the claim, such as the rental or lease of similar equipment. For the majority of contractors and contracting businesses, equipment insurance provides them with essential coverage.
Before purchasing your contractors’ equipment policy, you should make sure you speak with your broker, in detail, about what tools and equipment your business uses each day so they can be protected adequately at all times.
For more information about Contractor Equipment Insurance, call Archway Insurance at 1-833-536-0529 or contact us here.