Imagine getting to a jobsite in the morning and realizing your equipment trailer is gone. Inside it were saws, compressors, power tools and other equipment worth $50,000.
Most contractors know they need insurance on the truck and trailer. The part that can get missed is everything being carried inside them. A commercial auto policy may protect the vehicle and some permanently attached equipment, but loose tools and equipment are usually a separate coverage question. Progressive, for example, directs businesses toward inland marine coverage for loose tools and equipment carried in commercial vehicles. Progressive Commercial
That is why I would not wait until after a theft to figure out which policy covers what.
The truck, trailer and tools may not all be insured the same way
When I work with contractors, I like to separate the property into a few different groups. You have the vehicle, the trailer itself and then the tools or equipment being moved from job to job.
The commercial auto policy is usually where I look for coverage on the vehicle itself. Depending on how the policy is written, an owned trailer may also have physical damage coverage there or be handled under another form. The important point is that you should not assume coverage for the trailer automatically means everything sitting inside it is insured too.
Loose tools and mobile equipment are where inland marine coverage often becomes important. Inland marine is designed for business property that moves between locations, is in transit or is used away from the main business location. That makes it a natural fit for contractors whose equipment may spend one day at the shop, another day in a trailer and the next week at a jobsite. The Hartford
The exact policy matters here. I would not tell a contractor that the trailer is always covered by one policy while moving and another policy while parked. That can depend on how the trailer and equipment are listed and what coverage was purchased. The safer approach is to have your agent show you exactly where the trailer itself is insured and where the property inside it is insured.
Do you need to schedule every tool you own?
There are two common ways I see contractor equipment handled. Some items are specifically scheduled on the policy, while other equipment is covered under a blanket limit.
I personally like using blanket coverage for a contractor’s smaller tools when it makes sense. If every drill, saw and small piece of equipment has to be scheduled, the list can become difficult to maintain. Contractors buy and replace tools all the time, and I do not want the insurance program to depend on somebody remembering to update a spreadsheet every time another small item is purchased.
Larger equipment is different. If a contractor owns expensive machines or other high-value items, I would rather have those larger pieces identified clearly. Scheduling those items can also create a useful business record because we can track the make, model, serial number and current value. The carrier may ask for additional information depending on the equipment and policy.
The exact mix of scheduled and blanket coverage varies by carrier. Some contractor equipment forms can cover unscheduled property as well as specifically listed equipment. The Hartford, for example, describes contractor equipment coverage that can extend to equipment on file without requiring every item to be individually scheduled. Cloudinary
Your equipment values should not stay frozen for years
Having coverage is only useful if the values still make sense.
For scheduled equipment, I like having details such as the make, model and serial number along with an updated value. If an item is insured on an actual cash value basis, depreciation can matter. If replacement cost applies, we also need to consider whether the cost of replacing that equipment has changed.
Blanket coverage is usually less precise, but the total still needs attention. If a contractor started with $30,000 of tools and now has $80,000 spread across several crews, an old blanket limit may no longer match the business.
This is also one reason I like contractors to become more organized as their equipment values grow. A company with $50,000 or $100,000 of mobile equipment should know what it owns, where the larger items are and what they are worth.
Good insurance records can also make the business easier to run
I have not personally handled a major tool-theft claim for one of my clients yet, and I hope that continues. I have heard enough stories, though, to know how quickly equipment can add up once an entire trailer or group of tools disappears.
For contractors with a lot of equipment, I would use the insurance process as a reason to build a better equipment record. Start by identifying the larger items and recording useful details such as serial numbers, values and where they are being used. Over time, that same information can help track maintenance, equipment age and which employee or crew is using an item.
That organization is useful even if a claim never happens. An insurance agent can give better advice when the property information is accurate, but so can an accountant, business coach or anyone else helping the company make decisions. Better information usually makes a growing business easier to manage.
Make sure you know what would happen before the trailer disappears
A contractor does not need a perfect spreadsheet listing every $40 tool in the company. The goal is to have enough information to know what you own, what it is worth and where the important items are insured.
I would start by asking your agent to walk through three things with you: how the truck or van is insured, how the trailer itself is insured and how the tools and equipment inside are covered. Then look at whether your blanket limit still reflects what you actually own and whether larger equipment should be specifically scheduled.
The worst time to discover that those pieces were insured differently than you expected is the morning you find an empty parking space where your trailer used to be. If your contractor equipment has grown over the years and nobody has reviewed the values recently, that is something we can help you sort through.
Coverage varies by carrier and policy. Commercial auto and inland marine policies can handle trailers, attached equipment, loose tools and scheduled equipment differently. Review the actual policy terms, limits, deductibles and valuation provisions with your insurance agent.