Equipment at your office
This would include computers, desks, phone systems and other office related equipment. This type of equipment is generally insured for replacement cost. Many contractors work from their home and many of the home insurance policies limit coverage for business or professional property. To add coverage to your contractors policy is very reasonable from a price perspective and the coverage is quite broad as well.
If you rent office space and have made improvements to the space you rent you will also want to include coverage for tenants improvements. Insuring your tenants improvements means that you would not have to put up additional money to redo the improvements you have made to the part of the building you are renting, if a loss were to occur.
Many smaller contractors will have an office in their home. This is fine as this would be your location insured under your contractor's policy. Remember that your home insurance provider must be made aware that you have a business exposure at your home. Most home policies require you to disclose that you do have an office in your home. Coverage under home insurance for any business activities is very limited. In some cases not telling your insurance provider about your business activities could result in them denying any claim you make on your home insurance. This does not seem fair but rather than take the chance make sure you have permission for your business activities stated on your home policy, or confirmation from your insurance advisor that your insurer is aware of the business operations at your home.
Equipment at your shop
If you own equipment that remains at a workshop and is used at that location only, you can insure them as contents of a building. The reason you would want to do so; the rate is much lower than insuring them as contractor's equipment, and in many cases you would be able to secure replacement cost coverage on the equipment. I will cost you two to ten times more to insure this equipment under a Contractor's Equipment or Tool floater.
If the workshop is in a detached garage at your home you can insure the building under your business policy. If you use a garage for business purposes it will be excluded under you home insurance policy thus creating the need to insure that garage under your contractors policy. If the garage is attached to your home your home policy must give permission for business use.
If you are renting a shop you will want tenant\s legal liability which is covered under your Liability Insurance under the Contractor's Insurance Policy. See the post on Tenant's Legal Liability.
Contractors Equipment
Any equipment that you take to a job site needs to be insured as a tool or contractor's equipment in order to be properly insured. A contractor's equipment floater insures this property at the job site, at your home, at a location you may have arranged to park it, etc. Under a normal contents policy there is very limited coverage once your property leaves the insured location. Hence, the need for Contractor's Equipment insurance.
Normally, contractors equipment will provide replacement cost on items five years old or newer. Older items are usually insured for actual cash value (depreciated value). You will have to provide a list of items that you want insured under this floater and the value of each item.
The cost is usually around $8 to $10 per thousand dollars insured under Contractors Equipment coverage. Compare this to $30 per thousand under a tool floater and you begin to see how it would benefit you to insure under the Contractors Equipment Rider. The coverage is actually better under a contractors equipment coverage as well.
Tools
What is generally insured under a tool floater is smaller portable equipment such as skill saws, cut off saws, hand tools, small compressors, electrical cords, ladders, etc. The rates are quite high (about $27.50 to $30 per thousand insured) which is largely because of the likelihood of theft.
Most companies will allow you to insure tools under a floater. They will not require you to list each tool separately, however, most insurance companies will limit any one tool to a $1000 or, $1500. (some as high as $2500). This means that any tool over this limit needs to be scheduled under the tool floater or coverage will be limited to the $1000 or $1500 or whatever the maximum on any one tool is. I have seen policies that will insure up to $2500 on any one tool before they have to be scheduled. I personally prefer to try to get these larger tools covered under the contractor's equipment floater where the cost is lower and the coverage is less restrictive.
Most insurance companies require your tools to be locked up in a trailer or building. In other words, you can not just leave them laying around and easily accessible. (Contractor's Equipment is different and often does not have a restriction of this kind. See Above)
Insurance companies usually have a "Locked Vehicle Warranty" on the policy. If items covered under the tool floater are left in your vehicle the insurance company does not want to cover those tools unless the vehicle is locked.
Some insurance companies will not provide theft coverage if the theft occurs from an unoccupied building.(which is pretty much any job site). This causes some concern for contractors who do leave their tools at job site. If you remove them from the building and put them in a trailer and lock the trailer you will have coverage. If you leave the tools inside the building and the building is locked you would not have coverage. This really does not make sense, but a fair number of policies do have this restricted coverage. You have to check and make sure.
Of course the fewer limitations that you have under the policy the better.
Equipment You Rent from Others
If you are like most contractors you sometimes rent contractors equipment on a short term basis. Short term means less than thirty days. Most policies do not provide coverage for these situations automatically. If you are renting contractors equipment you must request coverage for that equipment from your advisor. He will add the coverage for the time period required.
Most insurance on contractors equipment has automatic coverage for newly acquired equipment for a specified value (usually up to $50,000) but this pertains to equipment you have purchased. After thirty days form the date of purchase you would add it to your schedule in order for there to be coverage.
Do no confuse the above with situations that involve temporally replacement equipment. If your skid steer breaks down and needs repairs, and you rent a replacement unit, most insurance companies will cover the rented replacement item automatically. There may be a dollar amount limit on this inside the policy. Since you have insurance on a skid steer that can not be in use, it follows that they are already collecting a premium for the replacement ski steer.
In a lot of cases insurance advisors are unaware of the limitations under the policy and mistakenly think that coverage is written into the policy when it is not. It is important that you advise your insurance advisor whenever you are renting contractors equipment. Smaller equipment which could be classified and covered under a tool floater would likely have coverage under the tool floater. This is not always the case.
You may want to check with the rental company to determine if insurance is provided with the rental. If they do provide coverage you may not have to add it to your policy. Make sure the coverage from the rental company provides physical damage such as collision and upset and not just theft and fire.
Equipment you rent to others
Most policies exclude coverage for equipment that you loan, rent, or lease to others. If you have some equipment that you rent to others from time to time you can get these items insured with permission to rent or lease added to that item. The premium will vary depending on the number of times and length of time you rent it. Always remember that your tools are not insured if the person you rent to disappears with your tools or mistreats them and returns them in rough shape.
Other Important Considerations
If you are operating contractor's equipment on a roadway you need a Driver's License. You can not have an unlicensed driver operating contractor's equipment in traffic or on public roadways. It may not be necessary to have a registration on the equipment but you still have to be qualified to drive on a public roadway.
If you have employees who are operating equipment on the job site you must provide proper instruction in the operation of the equipment. Although this does not exclude coverage under your insurance policy for damage to the equipment, you may have to deal with Worker's Comp and Occupational Health and Safety if someone is injured. This may result in fines and criminal penalties which are not covered under your insurance policy.
Equipment Attached to a Vehicle (Welders, Insulation Blowers, Carpet Cleaning Equipment, Lifts, Bucket Lifts, etc)
Anytime equipment is attached to a vehicle it may be insured with the vehicle. This would mean that you would have coverage with the vehicle insurance policy and do not need to insure it under your contractors insurance policy. Make sure you understand which policy is insuring this equipment.
You must be concerned about what this equipment does. If it is used for loading and unloading it requires special consideration.
Most lifts require periodic inspections so make sure you know what inspections are required.
Hook Insurance
Anytime you are lifting something with your equipment the load be lifted could be dropped. This is not covered under the normal property insurance policy. You have to have a special insurance rider in order to be covered. Tow trucks must carry hook insurance in most provinces. Your rate is determined by the average value, the amount you do it, and the maximum value of the load.
Liability for the operation of attached equipment is usually insured under the property policy but in some cases is covered by the vehicle insurance. In order to be properly insured your adviser should be aware of which policy is insuring the operation of the attached equipment.
I was wondering if you knew if I should insure tool rentals that I will be using for a construction project that I will be doing in my home? Is paying for the tool insurance worth it?
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