Tools and Equipment Insurance (Inland Marine) for Contractors
How tools and equipment insurance protects gear that moves between job sites, scheduled vs. unscheduled coverage, theft conditions and what to check.
For tradespeople, tools are the business. A stolen trailer of equipment or a toolbox lifted from a truck can stop work for days. Yet many owners discover too late that their property or auto policy doesn't fully cover tools away from their shop. Tools and equipment insurance, usually written on an inland marine form, fills that gap.
Why standard policies fall short
- Commercial property policies focus on property at your listed location and may offer only limited coverage off-premises.
- Commercial auto typically covers the vehicle, not the contents.
- Homeowners policies often limit or exclude business property.
Scheduled vs. unscheduled coverage
| Scheduled | Unscheduled (blanket) | |
|---|---|---|
| What it covers | Specific items listed by description and value | Tools and equipment in general, without listing each item |
| Best for | Expensive machinery: mowers, generators, compressors, lasers | Hand tools and smaller power tools |
| Common limitation | Each item must be listed and updated | Per-item maximum limit |
Many contractors use both: scheduled coverage for major equipment and blanket coverage for everything else.
Theft conditions
Theft is the most common tools claim. Some policies cover theft from a vehicle only if the vehicle was locked and there are signs of forced entry, or exclude theft from unattended vehicles overnight. Read these conditions carefully, because they can decide whether a claim is paid.
Other things to check
- Replacement cost or actual cash value.
- Deductible per claim.
- Whether rented or borrowed equipment is covered.
- Whether employees' personal tools are covered.
- Coverage for mysterious disappearance or inventory shortages, which is often excluded.
Protecting your tools
- Keep an inventory with photos, serial numbers and receipts.
- Engrave or mark tools with your business name.
- Use locking truck boxes and wheel locks for trailers.
- Avoid leaving tools in vehicles overnight when possible.
- Consider GPS trackers for high-value equipment.
Frequently asked questions
Why is it called inland marine insurance?
The name comes from the history of marine insurance, which covered goods in transit. Inland marine grew out of that to cover property that moves over land, including contractors' tools and equipment.
Does my auto policy cover tools stolen from my truck?
Usually not. Commercial auto policies typically cover the vehicle, not the tools and equipment inside it, which is why separate tools coverage is common.
Should I insure tools at replacement cost or actual cash value?
Replacement cost pays to replace with new equivalent items, while actual cash value deducts depreciation. Replacement cost usually costs more but pays more after a loss.