EQUIPMENT INSURANCE: What Is It & What Does It Cover?

Equipment Insurance
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Equipment insurance is essential coverage for any business that relies significantly on tools and equipment to keep operations functioning. It covers the cost of repairing or replacing critical things damaged or lost by accident. As a result, understanding what is and isn’t covered is critical to selecting the right coverage for your needs.  In this article, we will go over what things are covered, which accidents are covered, and the cost of construction equipment insurance. 


People who run their businesses face many problems, which is especially true when they depend on machines and tools to work properly. As it turns out, broken tools can mean lost time or money spent on production. Besides the lost time, you also have to pay for repairs. 

When companies’ machines or equipment break down, they may lose tens of thousands of dollars, depending on the details of the case. For instance, a grocery shop that has a broken freezer might have to buy new, expensive equipment and forfeit all of their frozen food. Say, for example, that a car repair shop’s hydraulic lift might break down, forcing it to close for a while and costing hundreds of thousands of dollars in lost sales and repair costs. 

In other words, businesses buy equipment breakdown protection for this reason. To provide financial support for repairs when your equipment breaks down and make up for lost income. As a separate policy or as an add-on to a business insurance policy, we reviewed the cost of the best companies that offer equipment breakdown insurance. 

Business Equipment Insurance

Equipment insurance is a type of policy that will pay to fix or replace the tools and equipment that your business needs if they are stolen, damaged, or broken by mistake. Although this coverage may seem simple, it is sometimes confused with other types of insurance due to similar components and overlaps with other plans. For companies that depend on their tools and equipment to run their activities, equipment insurance is an important form of protection. It pays for the cost of fixing or replacing important things that are lost or damaged by accident. 

Business Equipment Insurance: Who Needs Equipment Insurance? 

Businesses that count on their tools and equipment to run smoothly can benefit from getting equipment insurance. With this kind of insurance, your business can get back to work quickly if an important piece of equipment or tool is lost or stolen. Businesses in the following categories can benefit most from equipment insurance:  

  • Maid and cleaning services 
  • Construction Businesses 
  • Roofing Contractors 
  • HVAC workers work in heating, ventilation, and air conditioning (HVAC). 
  • Lawn care companies 
  • Services for professional installation 
  • Workers in trades, like plumbers, electricians, and builders 
  • Any company that uses computers and other tech tools and gadgets

Business Equipment Insurance Coverage

Equipment insurance covers a lot of different tools and machines that your business needs to run every day. Coverage includes everything from small gadgets to big machines, as long as they meet these three main requirements:

#1. You Have to Be Able to Move Things 

Intracoastal marine insurance covers things while they are being moved on land. One type of this insurance is equipment insurance. So, it only covers things that are movable from one place to another, like from the main office of your business to different job sites. Contractor’s tools and equipment insurance, also known as equipment floater insurance, is another name for equipment insurance. Coverage “floats” with your device wherever it goes, as the second name suggests.  

#2. They Can’t Be More Than Five Years Old  

There are two ways that equipment insurance can cover the costs of fixing or replacing your tools and machines:  

  • ACV insurance

pays the item’s fair market value at the time of loss, which is its original price minus the amount it has lost in value over time.  

  • Insurance for tools that covers their replacement cost value (RCV): 

It gives you the same amount of money as it would cost to buy a new thing to replace the one you lost or damaged. 

Insurance typically covers tools and equipment that are less than five years old. On the other hand, some policies also cover the costs of fixing and replacing older items, but only if they are worth more than their real cash value. Your tools and equipment will finally reach the point where they are no longer worth replacing.    

#3. It Must Be Less Than $10,000 Worth of Things  

In most cases, the most that equipment insurance will pay out during the policy period is $10,000. Mainstream insurance doesn’t usually cover expensive, top-of-the-line tools. Coverage generally comes at a high cost for policies that do, though.  

Business Equipment Insurance Coverage: What It Covers

From small hand tools to large machines, equipment insurance covers a very wide range of things. This is a list of the different types of things that these kinds of plans usually cover.  

#1. Hand Tools

Tools like axes, chisels, cutting bars, hammers, hand saws, levels, pliers, screwdrivers, trowels, shovels, and tape measures 

#2. Power Tools

 There are air compressors, angle grinders, biscuit joiners, circle saws, drills, jackhammers, nail guns, reciprocating saws, and impact drivers. 

#3. Medium-Sized Machines

Cranes, backhoes, bulldozers, excavators, forklifts, graders, pavers, tractors, trenchers, and wheel loaders are some of the machines that are used. 

#4. Wearing Clothes and Safety Gear 

Wear protective clothes, respirators, hard hats, hearing protection, high-visibility vests, safety shoes, safety gloves, safety goggles, and safety heels.  

#5. Other kinds of Equipment

Workbenches, toolboxes, ladders, sawhorses, scaffolds, stand lights, and hand trucks 

#5. Hardware for Computers

Copiers, camcorders, laptops, desktops, projectors, monitors, and tablets 

There are also plans that cover tools and equipment that your business rents or borrows. 

Business Equipment Insurance Coverage: Incidents Covered

Equipment insurance typically covers every risk. Meaning that things that aren’t listed in your insurance document may still be covered. These things are covered by most tools and equipment insurance policies: 

#1. Stolen Things

Theft that happens on the job site while your tools and equipment are being moved or while they are in a storage facility is covered by liability insurance.   

#2. Unintentional Damage

Covers situations where an employee breaks or damages tools while doing their job. Accidental loss or damage, like a water leak hurting your power tools or computer equipment, is also covered by policies.   

#3. Nature-Based Disasters

Insurance for equipment covers damage or loss caused by natural disasters like lightning, storms, snow, and wildfires. Depending on where you live, some plans don’t cover damage from flooding or earthquakes by default. However, carriers can add extra coverage through riders.  

#4. Criminal Damage 

This policy covers acts of mischief that hurt your tools and equipment while they are in transit or on the job site.

Equipment Insurance Cost

The majority of equipment insurance policies have a maximum coverage limit of $10,000, but there are a few that allow you to expand the limit to cover more expensive equipment. The majority of insurance equipment cost is less than $10,000. If you are in the process of determining the cost of insurance coverage your company needs, the following are some things that you need to take into consideration: 

  • What kinds of implements and appliances do you wish to be included? 
  • How much these various pieces of equipment and gadgets are currently worth?
  • How many years these various tools and pieces of equipment have been in use?
  • Where do you keep all of these different tools and pieces of equipment? 
  • How do you ensure that these tools and equipment are in good working order? 
  • Where do you conduct the day-to-day operations of your company?
  • How much of a deductible are you able to put toward your insurance? 
  • The rate of coinsurance that will apply to the policy 

If you are the owner of a start-up or a small firm, then you are aware that suspending operations might result in significant financial losses. However, purchasing a number of different policies in order to provide adequate protection for your company can reduce the cost of equipment insurance you take home. Because of this, it is necessary that you engage in careful planning before determining the level of coverage that you require.

Construction Equipment Insurance

A big part of your job as a worker is to make sure you have the right tools for each job. Even though it’s hard to do this because the building is moving forward and the tools are always being switched out, This means that these things are often lost. Making sure you have protection for these tools is important because of this. For contractors, learn what tools and equipment insurance is, what it covers, and how the software will keep track of which tools are covered.

Construction Equipment Insurance: What it is

The term “contractor equipment insurance” refers to a comprehensive policy that can reimburse the policyholder for lost or damaged construction equipment. Insurance coverage for contractors can extend beyond only insuring equipment; it can also cover small tools, the clothing and equipment of employees, as well as borrowed equipment.

The policy may even help with the payment of clean-up expenses and the removal of debris following an accident if contractors’ equipment coverage applies to the loss. Contractors’ insurance can also cover theft-related losses, and the policy may also help with the payment of additional costs incurred because a covered loss has delayed the completion of a project.

Construction Equipment Insurance: What It Covers

Construction equipment insurance covers a wide range of expenses and contingencies. The following are typically included in the coverage of insurance policies for construction equipment:

  • Protection against untoward events
  • Maintenance, including replacement of broken components and repairs
  • Theft and financial loss
  • Damages to the site as well as other equipment

This means the purpose of equipment insurance is to offer all-encompassing financial and asset protection. In the event that accidents involving construction equipment cause damage to your facilities or other machines, your coverage might assist you in covering the costs of repairs. Reading through the coverage will help you ensure that you have the appropriate level of protection for your needs, as different providers and plans offer varying degrees of coverage. 

Also, while every carrier addresses a unique set of circumstances, many of the same considerations are left out of their coverage. Therefore, it is reasonable to anticipate that the insurance policy will not pay for accidents brought on by improper use or abuse of rented equipment. The failure to properly store or protect rented equipment throughout the rental period can be considered abuse, holding renters accountable for any damage or theft that results.

Lastly, it’s time to start protecting your investment once you’ve found the right insurance company and the construction equipment is covered properly. It’s also important to know what your choices are in case your insurance doesn’t cover them. This includes keeping your equipment safe and knowing the limits of your policy’s coverage.

Construction Equipment Insurance: Who Needs It

Your construction company should always have commercial insurance. Many clients need construction companies to hold particular insurance coverage as a condition of working for them. Businesses that concentrate on construction work usually specialize in the following trades:

  • Excavation 
  • Home Improvement
  • Land clearing 
  • Remodeling 
  • Home Building 
  • Asphalt laying
  • Welding 
  • Sprinkler installation
  • Parking lot striping
  • Fence & deck building 
  • Concrete laying
  •  Stone & granite work
  • Roofing
  • Windows & siding

What is included in machinery and equipment?

These can include computers, copiers, telephone systems, and any electronic gear.

What is portable equipment insurance?

Portable equipment insurance works to protect your valuable kit against theft, loss and damage

Is equipment used by the business an asset?

Equipment is a fixed asset or a non-current asset.

What is machinery breakdown insurance?

Machinery breakdown insurance, which grew out of traditional property insurance, covers sudden and unforeseen losses of machinery and equipment installed and already in use in factories and mines.


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