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We will never forget the phone call we received from a residential contractor whose truck, full of tools, was stolen from a parking lot. The contractor had a business auto policy that covered the stolen vehicle but had declined to purchase inland marine coverage for the tools. Thousands of dollars’ worth of tools were stolen with no insurance coverage in place to replace them, creating an unexpected expense and potentially disrupting the contractor’s ability to keep jobs moving.
What is inland marine coverage?
Don’t be fooled by the term “marine” in the name. It’s a kind of insurance that covers property such as tools, equipment, and other property that moves from place to place. Ocean marine insurers first offered the coverage, so the word “inland” distinguishes it from cargo shipped by sea.
Where are your tools covered?
As a residential contractor, you may have tools in a variety of places such as in your shop; in your vehicle; and on the job site. The type of coverage for your tools depends on where they are located.
Tools in your shop: business personal property coverage may cover tools and equipment kept at your business premises, subject to the terms and limits of the property policy.
Tools in your vehicle or at a job site: inland marine coverage is designed for the mobile nature of a contractor’s property and can provide protection as the tools are moved from place to place or away from your primary business location.
Insuring your tools
Consider how much it would cost to replace your tools and equipment today. Use this as a starting point for your insurance coverage.
Also consider:
- Where the equipment is typically stored or located
- Frequency of moving it between job sites
- Recent purchases of expensive equipment
- Deductibles on your policy and the current coverage limits
- Whether to specifically schedule high valued items
Examples of inland marine claims
A common claim for tools covered in an inland marine policy is theft. Here are a few other types of damages or loss to tools:
- Fire
- Vehicle accidents
- Water damage
- Windstorms
- Vandalism
Coverage varies by policy, so exclusions, limitations, deductibles, and valuation should always be reviewed.
Review your insurance policy
As a residential contractor, it’s good practice to review your insurance annually.
- Has your tool supply drastically increased or decreased?
- Have you recently purchased or sold large equipment?
- Are any of your tools or equipment more mobile than they had been?
- Are any of your tools or equipment stored in a new location?
- If you have coverage (inland marine or business personal property), is the limit still adequate? Would you be able to quickly continue operations if you had a major loss?
At FIFS, we can review your current insurance policy and help identify potential gaps in coverage, so your business doesn’t take a hit if something bad happens.
