Equipment Insurance 101

July 05, 2023
A professional painter sprays a porch railing with a paint sprayer.

Businesses in certain industries such as construction rely on a large assortment of tools and equipment to get the job done well and on time. Unfortunately, theft and accidents sometimes occur, leaving a company with broken or missing gear. When that happens, equipment insurance coverage can help cover the costs of repairs or replacement of covered equipment.

What Is Equipment Insurance?

Equipment insurance is a type of inland marine insurance. It may also be referred to as "equipment floater insurance." Construction, contracting, and  other industries often purchase equipment insurance to help cover losses due to the damage or theft of their portable equipment and tools. An equipment insurance policy may also include coverage for borrowed and rented equipment and tools. Having insurance coverage that helps pay for repair expenses can help the business accelerate a delayed project after a covered loss.

Equipment insurance is different from other types of commercial insurance such as commercial general liability coverage. Commercial general liability insurance generally helps the insured pay for damages to the property of clients, while equipment insurance provides coverage for the business’s equipment.

What Does Equipment Insurance Typically Cover?

Equipment insurance covers losses to business’s movable tools and equipment. If an item is lost, stolen, or damaged, the policy typically helps insured to pay for repairs or replacement of the covered equipment.

For example, a crew member may accidentally drop a tool that then needs repair. Even if the equipment is rented, an equipment insurance policy may provide coverage for the damaged equipment.

Or an item might break during transit. Motors, pumps, and generators may fail in the middle of a project. Having equipment insurance coverage can typically be help cover some of the costs of repairs in situations like these.

Theft and vandalism may render a tool unusable or unavailable. In fact, theft leads to millions of dollars in losses across the construction industry. Equipment insurance will typically cover not only the cost of the repair or replacement of the equipment but also the lost business income if the damage to covered equipment causes an interruption to the business.

Equipment insurance may also cover other expenses resulting from the damage to covered equipment. For example, a business may have to replace spoiled inventory for food service during a loss of power. A piece of equipment may leak contaminants onto a job site and require cleanup. Equipment insurance can help the business get back on track.

What Doesn't Insurance on Equipment Typically Cover?

Equipment insurance typically provides coverage for tools and equipment under $10,000. Repairs or replacement of more expensive equipment may require another type of insurance coverage.

Equipment insurance coverage is not a warranty that replaces or restores items from general wear and tear. You should keep guarantees and warranty agreements after purchasing equipment and tools to repair or return an item that fails due to regular wear and tear. Additionally, equipment insurance doesn’t typically cover intentional misuse or breakage of work gear, or software on a computer.

Equipment insurance typically covers equipment that is less than five years old. Portable tools depreciate faster than large equipment and are often nearing the time for replacement at five years.

Who Should Consider Purchasing Insurance for Equipment?

Businesses that usually require travel to different job sites may benefit from having equipment insurance coverage. Independent contractors supplying their own tools or renting equipment for jobs can avoid an expensive replacement if they have equipment insurance coverage. The following are examples of the types of businesses that  can benefit from having equipment insurance coverage :

  • Plumbers
  • HVAC repair people
  • Landscapers
  • Builders
  • Electricians

This type of insurance isn't just beneficial for workers in construction or related industries. For example, cleaners and janitorial service companies may rent pressure washers for one-off jobs and may need protection from potential losses resulting from damage to such equipment.

Food service companies use costly equipment that could be broken or stolen. Barbers, DJs, photographers, and nail techs are a few more examples of independent contractors who travel with valuable tools that may benefit from having insurance to cover costs of repair or replacement of their equipment.

Need Insurance on Your Equipment?

If you want to learn more about added protection for your equipment, contact Acrisure to find an insurance company that offers insurance solutions that are right for your business.

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