There's no worse way to start a workday than walking out to your truck and finding the lock box pried open. We've taken that call from contractors across Indiana, Illinois, and Michigan more times than we'd like, and the follow-up question is always, "My insurance covers this, right?"
The honest answer is: it depends on what kind of policy you have. A lot of contractors assume their general liability or commercial auto policy protects their tools, and unfortunately, it usually doesn't. Here's what actually covers your gear and how to make sure you're set up before something happens.
Does my general liability policy cover my tools?
No. General liability protects you when you damage someone else's property or injure someone else. It doesn't cover your own tools, equipment, or materials. It's one of the most common misunderstandings we run into with contractors.
What about my commercial auto policy? The tools were in my truck.
Also usually no. Commercial auto covers the vehicle itself and liability from driving it. Tools and equipment stored inside the truck or in a truck box generally aren't covered unless they're permanently attached to the vehicle. Even then, it depends on the policy.
So if someone breaks into your work van and takes your saws, drills, and nail guns, your auto policy may pay to fix the broken window, but not to replace what was stolen.
Won't my homeowners policy cover it?
Probably not much. Most homeowners policies sharply limit coverage for business property, and many limit it even further when that property is away from your home. For a contractor carrying thousands of dollars in tools, those limits won't go far. And if the tools are owned by your business, a personal policy may not apply at all.
So what does cover stolen tools?
The coverage you want is called inland marine, often written as a tools and equipment floater or contractor's equipment coverage. Despite the name, it has nothing to do with boats. It's designed for property that moves from place to place, which is exactly what contractor tools do.
This coverage generally protects your tools and equipment:
It typically covers theft, fire, vandalism, and certain types of damage, depending on how the policy is written.
What's the difference between scheduled and unscheduled equipment?
Scheduled equipment means each item is listed on the policy with its value, usually for larger or more expensive items like a skid steer, generator, or laser level. Unscheduled equipment is a blanket limit for smaller hand and power tools, often with a per-item cap.
Most contractors in Indiana, Illinois, and Michigan end up with a mix of both. We'll usually schedule anything big and put the rest under a blanket limit.
Does it pay replacement cost or actual cash value?
This matters more than people think. Replacement cost pays what it takes to buy the item new today. Actual cash value pays what the item was worth at the time of loss, after depreciation. A five-year-old saw might not be worth much on paper, even though you'll pay full price to replace it. Ask which one your policy uses.
Are there conditions for theft from a vehicle?
Often, yes. Some policies only cover theft from an unattended vehicle if it was locked and there's visible sign of forced entry. Some have separate limits or higher deductibles for theft from vehicles. We always point out these conditions to our clients because they come up at claim time.
What about tools I rent or borrow? Or my employees' tools?
Good questions to ask. Many inland marine policies can include coverage for rented or leased equipment and employee tools, but those usually have to be added. If you rent equipment regularly, check your rental agreements too, since rental companies often hold you responsible for loss or damage.
How can I make a claim go smoothly?
Keep an inventory. Seriously, this is the single best thing you can do. Take photos, write down serial numbers, and save receipts, even if it's just in a folder on your phone. Engrave or mark your tools. When something gets stolen, you'll also want to file a police report right away.
Protect the tools that pay your bills
Your tools are how you make a living. At Shurr Insurance Agency, we help contractors across Indiana, Illinois, and Michigan put together coverage that actually protects their equipment on the jobsite, in the truck, and everywhere in between. If you're not sure whether your tools are covered right now, give us a call. We'll review your current policies and show you exactly where you stand.
Disclaimer: This article is provided by Shurr Insurance Agency for general informational purposes only and does not constitute legal or insurance advice. Coverage availability, terms, and requirements vary by insurer, policy, and state. Please contact a licensed Shurr Insurance agent to review your specific situation.