Here's a scenario every general contractor dreads: You arrive at the job site Monday morning to find your work truck's back window smashed and $15,000 worth of power tools gone. Or maybe it's not theft—maybe your excavator tips over during transport, or a fire destroys your equipment trailer. Without the right insurance, you're paying for replacements out of pocket while your projects grind to a halt.
Most contractors assume their commercial property insurance covers their tools and equipment. It doesn't—at least not once that equipment leaves your business premises. That's where equipment and tools insurance, technically called inland marine insurance, becomes essential. It's designed specifically for the mobile reality of construction work, protecting your gear wherever your business takes you.
Why Regular Property Insurance Isn't Enough
The gap in coverage catches contractors off guard all the time. Your commercial property insurance protects equipment and inventory only at your listed business location. The moment you load tools into your truck and head to a job site, that protection stops. Your property policy assumes your stuff stays put—which obviously doesn't work for contractors.
Inland marine insurance fills that gap. Despite the confusing name (it has nothing to do with boats or water), this coverage follows your property wherever it goes. Job sites, client locations, stored in your vehicle overnight, in transit between projects—inland marine coverage travels with your equipment. It's called "marine" because historically, this type of insurance covered goods being shipped by sea. Now it applies to anything that moves over land.
For general contractors, this distinction is critical. Your tools and equipment are the backbone of your business. When they're damaged or stolen, you can't work—and construction companies collectively lose between $300 million and $1 billion per year to equipment theft alone. That's not a typo. Thieves know that contractor trucks and job sites are gold mines, often containing tens of thousands of dollars in easily resellable tools.
What Equipment Insurance Actually Covers
Equipment and tools insurance protects against theft, vandalism, accidental damage, fire, and water damage. Whether someone breaks into your truck at a job site or your equipment gets damaged during transport, you're covered. The policy pays for replacement or repair costs, typically on either a replacement cost basis (what it costs to buy new) or actual cash value basis (replacement cost minus depreciation).
Your owned equipment is obviously covered—from heavy machinery like excavators and skid steers down to everyday power tools like drills and saws. But most policies also protect rented, leased, or borrowed equipment. This is huge for contractors who rent specialized machinery for specific projects. If you damage that rented lift or someone steals that leased generator, your insurance handles it instead of you paying out of pocket.
The protection is comprehensive in terms of location too. Tools stolen from your truck, equipment damaged at an unsecured job site, machinery that breaks down in transit—all covered. Even if your equipment is stored at your home overnight or in an off-site storage facility, the policy continues protecting it. This continuous coverage is what separates inland marine insurance from traditional property policies.
Scheduled vs. Blanket Coverage: Which Do You Need?
When you set up equipment insurance, you'll choose between two approaches—or more likely, use a combination of both. Understanding the difference helps you get the right protection without overpaying.
Scheduled coverage means listing specific high-value items individually on your policy, each with its own coverage limit. Think your excavator, your work truck, your welding equipment—expensive pieces where you want guaranteed full replacement value. Your insurer keeps a detailed list on file, and you can typically add new equipment as you acquire it. The advantage is crystal-clear coverage with no ambiguity about whether a specific item is protected.
Blanket coverage, on the other hand, covers all your smaller tools as a group under a single overall limit. Instead of listing every drill, saw, and nail gun individually, you get one coverage limit—say $50,000—that applies to all unscheduled equipment. No itemized lists needed. The policy just covers everything that fits the agreed-upon definition of "covered property."
Most contractors use both. Schedule your major equipment individually to ensure full protection, then use blanket coverage for your collection of hand tools and smaller power tools. This hybrid approach balances comprehensive protection with practical administration. Just be aware that blanket policies may have per-item limits—for example, paying up to $5,000 for any single unscheduled item—and often carry higher deductibles than scheduled coverage.
What Equipment Insurance Actually Costs
Here's the good news: equipment insurance is surprisingly affordable relative to what you're protecting. Basic coverage can start as low as $19 per month for low-risk operations with limited equipment. Small contractors with basic tool sets often pay around $14 per month. Even more comprehensive coverage rarely breaks the bank—consider that the average small business pays about $142 per month for general liability coverage, and equipment insurance typically costs less.
Your actual cost depends on several factors: the total value of equipment you're insuring, what types of tools and machinery you own, where you work and store equipment, your claims history, and your chosen deductible. Higher-value equipment obviously costs more to insure, but the protection becomes even more critical. If you're carrying $100,000 in heavy machinery, paying a few hundred dollars monthly to protect that investment is a no-brainer.
The market conditions in 2025-2026 are actually working in contractors' favor. Existing insurers have expanded capacity, allowing them to handle larger equipment schedules, while new companies entering the market are offering competitive rates and lower deductibles. It's worth shopping around—you might find better coverage for less than you expect.
How to Get Started
Getting equipment insurance doesn't have to be complicated. Start by creating a complete inventory of your tools and equipment. For major items you plan to schedule, note the make, model, serial number, purchase date, and current value. For smaller tools you'll cover under a blanket policy, just estimate the total replacement value of everything combined.
Decide whether you want replacement cost or actual cash value coverage. Replacement cost costs more upfront but pays to replace stolen or destroyed items with new equivalents. Actual cash value is cheaper but deducts depreciation from your payout—so that five-year-old piece of equipment might only net you half its replacement cost. For most contractors, especially those with newer equipment, replacement cost coverage is worth the extra premium.
Talk to an insurance agent who specializes in contractor coverage. They can help you determine the right balance between scheduled and blanket coverage, recommend appropriate coverage limits, and identify any gaps in your protection. Many agents can get you multiple quotes from different insurers, helping you find the best combination of coverage and price. Don't just add equipment coverage to your existing policy as an afterthought—make sure it's actually designed for contractors who move equipment between job sites.
Your tools and equipment represent a massive investment in your contracting business. They're how you make your living. Protecting them with proper inland marine insurance isn't just smart risk management—it's essential business protection that costs far less than replacing everything out of pocket after a theft or accident. Take the time to get coverage that actually follows your equipment wherever your work takes you.
