Most contractors know that it is essential to obtain various forms of insurance coverage to protect themselves from liability and litigation. However, some contractors are surprised when they learn that certain types of equipment that are transported from job site to job site are not always covered under standard commercial property insurance policies.
Here's how having a Contractors' Equipment Insurance policy can help protect your business:
What Is Contractors Equipment Insurance?
Contractors equipment insurance, sometimes referred to as equipment floater insurance, is a form of inland marine insurance that provides protection for equipment and tools that are easily transported from one location to the next. Such policies provide coverage for the direct physical damage and loss to mobile machinery and equipment that is used to complete projects.
While standard commercial liability coverage is good for insuring equipment that remains at one, fixed location, it cannot safeguard mobile equipment or items that travel with a contractor. Such items often include the following types of equipment:
- Bulldozers, road graders, forklifts, loaders, backhoes and concrete mixers.
- Hand tools and spare parts.
- Generator, compressors, hoists, pneumatic tools and cables.
- Derricks and draglines.
The value of these tools can range from hundreds to thousands of dollars, and, without protection, businesses would have to recoup these losses themselves.
What Does Contractors Equipment Insurance Cover?
Most contractors equipment insurance policies are written on an “all-risk” basis, meaning that all perils except those specifically excluded by the terms of the policy are covered. Typically, contractors equipment insurance protects firms from a variety of exposures, including thefts, fires, floods, equipment breakdowns, vandalism and other types of damage. This coverage persists as the equipment is moved from job site to job site.
When evaluating policies, contractors should also look for the following elements of coverage, which may already be included in a policy or may need to be added through an endorsement:
- Coverage for equipment leased, rented or borrowed from others. For many contractors, it doesn’t always make sense to own all of their equipment. Sometimes a business will lease equipment from someone else. An equipment lease typically makes the contractor liable for damage to the equipment that occurs during the term of the lease.
- Rental reimbursement and continuing expenses. If equipment is damaged by a covered loss, many insurance companies will provide coverage for additional expenses related to the claim, such as rental or lease of similar equipment, overtime wages needed to complete the work and transportation of the rented equipment.
- Coverage for expediting expenses. Specialized or customized equipment that is compromised may not be easily replaced. To keep work on schedule, contractors often incur additional labour or freight costs to expedite delivery of replacement tools and equipment. Some forms of contractors equipment insurance can help cover these expenses.
Find out more:
Assessing your exposures and taking the appropriate precautions can go a long way toward protecting your business. Download our “Contractors' Equipment Insurance” guide for an in-depth list of more ways to minimize gaps in your risk management: