Contractor equipment insurance: covering tools that do not stay in one place

IRMI's definition is one sentence and it says everything: an equipment floater is "Property insurance covering equipment that is often moved from place to place. It is a form of inland marine insurance" (IRMI, equipment floater). In the trade it goes by several names, contractors equipment, tools and equipment, an inland marine schedule, and the label on the quote is less informative than the structure underneath it.

Two structural choices shape what you get. The first is how the property is listed. Larger items are usually scheduled, described individually with a limit each, which is why a machine bought in March is not covered in April unless somebody added it. Small tools are usually blanket, covered up to a total limit with a cap on any one item, which is why a single expensive item can be underinsured inside a policy that looks adequate in total. The second is how a loss is valued, replacement cost or actual cash value, which decides what a five-year-old machine is worth on the day it is stolen. Neither of those is exotic and both are answerable in a five-minute conversation before you buy.

Two more items belong on the list of questions. Equipment you rent or lease from a yard is usually your responsibility under the rental contract, and whether the policy covers it, and to what limit, is a separate answer from whether it covers what you own. And equipment belonging to somebody else that sits in your charge raises the care, custody, or control question: IRMI describes that as an exclusion common to several forms of liability insurance, eliminating coverage for damage to property in the insured's care, custody, or control, with courts reading the phrase as either physical possession or a legal duty of care. Property coverage rather than liability coverage is usually the answer to that exposure, but it has to be arranged rather than assumed.

The installation floater. IRMI defines it as "Inland marine coverage on property (usually equipment) being installed by a contractor," and describes it as a specialized form of builders risk coverage, usually written on the same documentation format as a builders risk policy (IRMI, installation floater). Both policies are inland marine and both follow moving property, so the names blur. The difference is whose property it becomes. The installation floater follows the rooftop unit, the switchgear, the millwork from the shop to the site to the moment it is accepted; the equipment floater follows the lift you used to set it. On a project scale that first exposure is usually handled inside builders risk insurance, which insures the work under construction with the finished value as the limit.

The auto policy. This is where contractors most often guess wrong, because the machine has an engine and moves under its own power. IRMI defines mobile equipment as "Equipment such as earth movers, tractors, diggers, farm machinery, forklifts, etc., that, even when self-propelled, are not considered automobiles for insurance purposes," the line being whether the item is subject to motor vehicle insurance laws, and draws the consequence: liability arising from such equipment is covered under the general liability policy, while physical damage to it is typically covered by an equipment floater rather than an auto policy (IRMI, mobile equipment). So one machine can touch three policies: general liability for what it does to others, the floater for damage to the machine, and commercial auto for the truck and trailer that carry it. The NAIC's guidance on that last one is that a business owning or leasing vehicles needs commercial auto, and that personal auto policies may exclude business-related liability.

There is no single standard equipment floater the way there is a standard general liability form, and the forms in this line are not published for the public to read. So this page does not print a list of exclusions and call it the answer. What can be said with a source behind it is the family the exclusions come from: property forms are written for accidents rather than for outcomes that were always coming. IRMI's treatment of equipment breakdown notes that property and equipment breakdown policies alike exclude losses from lack of maintenance and expected wear and tear, and that standard property forms exclude mechanical breakdown itself, which is the gap equipment breakdown coverage was created for. Expect a floater to answer for theft, fire, collision damage, and the machine that went off the trailer, and to argue about the one that simply wore out.

The questions that settle it are in the FAQ below, and every one of them is a question an agent who writes contractors can answer from the form in front of them. Ask them before the policy binds rather than after a job box goes missing.

Every trade owns tools; not every trade's business stops when they are gone. A landscaping crew's mowers, blowers, and trailers are the production capacity of the company, they live on a trailer that sits outside overnight, and the season does not pause while they are replaced; the landscaping insurance page covers that trade's wider set. A pressure washing operation is a small number of expensive items, a rig and a machine, where losing one unit is losing the ability to work at all, and the pressure washing business insurance page has the exposures that come with the water as well as the gear.

For how equipment coverage sits next to the rest, contractor general liability insurance answers for other people and their property, contractor workers comp insurance for your crew, and contractor errors and omissions insurance for the loss where nothing was damaged at all. The set is laid out on the contractor insurance coverage overview, and the InsuredCrew home page starts from the trade instead.