If you're an electrical contractor, you already know your tools are your livelihood. That diagnostic meter you spent $800 on? The wire strippers, voltage testers, conduit benders, and power tools that fill your work van? They add up fast—often to $20,000, $30,000, or more. And here's the thing most contractors don't realize until it's too late: your standard business insurance doesn't cover those tools once they leave your shop.
That's where equipment and tools insurance comes in. It's technically called inland marine insurance (don't ask why—the name makes no sense for landlocked contractors), and it's specifically designed to protect the tools and equipment that travel with you from job to job. Let's break down everything you need to know about protecting your gear.
Why Your Regular Business Insurance Isn't Enough
Commercial property insurance protects what's at your fixed location—your office, warehouse, or shop. But once you load those tools into your truck and head to a job site, that coverage stops. And your commercial general liability policy? It typically caps tool coverage at a measly $1,000 to $2,000. That might cover a few basic hand tools, but it won't come close to replacing your expensive diagnostic equipment or power tools.
Tool theft is one of the most frequent claims in the construction industry. Thieves love contractor tools because they're portable, expensive, and easy to resell. Whether it's a smash-and-grab from your work van at a hotel or tools that disappear from an unsecured job site, you need coverage that actually matches the risks you face every day.
What Inland Marine Insurance Actually Covers
Equipment and tools insurance protects your gear wherever it goes. This includes theft, vandalism, fire, accidents, and natural disasters like floods or lightning strikes. The coverage follows your tools whether they're at a job site, in your truck, stored in a warehouse, or in transit between locations.
Here's what typically gets covered for electrical contractors: power tools (drills, saws, grinders), hand tools (wire strippers, pliers, screwdrivers), diagnostic and testing equipment (voltage testers, multimeters, thermal cameras), ladders and scaffolding, conduit benders and threaders, generators and compressors, and even leased or borrowed equipment. Many policies offer replacement cost coverage for equipment that's less than five years old, meaning you get the money to buy new tools rather than depreciated values.
Scheduled vs. Blanket Coverage: Which Do You Need?
When you buy equipment insurance, you'll need to choose between two coverage approaches—or more likely, use both.
Scheduled coverage means you list specific high-value items individually on your policy. Think of it like itemizing on your taxes. You provide the make, model, serial number, and value of each piece of equipment—like that $3,500 thermal imaging camera or your $2,000 cable fault locator. Each scheduled item gets its own coverage limit.
Blanket coverage insures all your equipment under one aggregate limit without itemizing every single tool. Instead of listing each wrench and screwdriver, you tell your insurer you have $25,000 worth of tools total, and everything that fits the policy's definition of "covered property" is automatically protected.
Most electrical contractors use both. You schedule your expensive diagnostic equipment and specialized tools that would be costly to replace, and you use blanket coverage for all your hand tools and smaller items. This hybrid approach gives you specific protection where you need it while avoiding the hassle of documenting every tool in your arsenal.
What Equipment Insurance Actually Costs
Good news: equipment insurance is surprisingly affordable. In 2025-2026, most electrical contractors pay $12 to $50 per month to insure $10,000 to $15,000 worth of equipment. The industry standard is roughly $0.80 per $100 of coverage, so if you need to insure $100,000 in equipment, you're looking at around $800 annually with a $1,000 deductible.
Several factors affect your premium. Higher coverage limits mean higher premiums, obviously. Your deductible matters too—choosing a $500 deductible costs more than a $2,500 deductible, but you'll pay less out of pocket if you file a claim. Where you work also impacts cost; urban areas with higher theft rates typically see higher premiums. And your claims history counts—if you've filed multiple theft claims, expect to pay more.
Many insurers have minimum premiums around $500 annually, so even if you only need $20,000 in coverage, you might hit that minimum. But when you consider that replacing your tools out of pocket could cost tens of thousands of dollars, that $500 to $800 annual premium looks pretty reasonable.
Why Clients Often Require This Coverage
Even if your state doesn't legally require equipment insurance for electrical contractors, many commercial clients and general contractors do. Before you're allowed to step foot on a job site, you may need to submit a certificate of insurance proving you have adequate coverage.
Why do clients care? They want to make sure that if your tools are stolen or damaged on their property, you can replace them without filing a claim against the property owner or delaying the project. It's about protecting everyone involved. If you show up to a commercial job worth $50,000 and your tools get stolen the first day, the client wants assurance that you'll be back on the job the next week with new equipment—not stuck waiting weeks to save up for replacements.
How to Get Started with Equipment Insurance
First, inventory your tools and equipment. Go through your truck, your shop, your storage—everywhere you keep gear. Note the make, model, serial number, and purchase price (or estimated replacement cost) for everything. Take photos while you're at it. This documentation serves double duty: it helps you get accurate coverage quotes, and it makes filing claims much easier if something does get stolen.
Decide which items need scheduled coverage and what can fall under blanket coverage. Anything worth more than $2,500 to $3,000 should probably be scheduled individually. Everything else can be bundled.
Talk to an insurance broker who specializes in contractor coverage. They can help you find the right coverage limits and compare quotes from multiple carriers. Often, you can bundle equipment insurance with your general liability and commercial auto policies for a discount.
Finally, update your coverage as you grow. When you buy new equipment, add it to your policy. If you sell or retire old tools, reduce your coverage accordingly. An annual review with your broker ensures you're neither over-insured (wasting money) nor under-insured (risking financial disaster).
Equipment and tools insurance isn't sexy, and it's easy to put off. But when you're an electrical contractor operating on tight margins, losing $30,000 in tools to theft or a van fire can put you out of business. For less than $100 a month, you can protect your livelihood and keep working no matter what happens. That's not just smart business—it's essential.
