General liability coverage? Check! Commercial property insurance? Check! A business owners policy that combines both? Check!
Does this mean you have all your bases covered when it comes to protecting your business property?
Well, almost!
You might be surprised to learn that these policies don’t always cover business equipment that moves from one job site to another. That’s where contractor’s equipment insurance comes in handy. Here’s everything you need to know about this insurance.
What is Contractor’s Equipment Insurance?
If you’re on the hunt for insurance coverage that protects your business equipment, consider a contractor’s equipment policy.
Contractor’s equipment insurance covers the repair or replacement of your equipment if it’s lost, stolen, or damaged. It’s a floater policy, meaning it moves with your equipment. Your gear is covered whether it’s being transported in a vehicle, stored in a trailer, or used at a job site.
Contractor’s equipment insurance is a great supplement to other kinds of business insurance. You may be able to get it as a stand-alone annual policy, but providers often sell it as an add-on to common insurance products like:
- General liability insurance
- A builder’s risk policy
- An insurance bundle (such as a commercial package policy)
Contractor’s equipment insurance is sometimes called tools and equipment insurance. It’s also a type of inland marine insurance. That name is confusing, for sure, since we’re not talking about anything boat related.
Inland marine is a large category of insurance that covers materials, products, and equipment transported over land, like with a van or truck, or stored in a third-party warehouse–for all different types of industries.
Contractor’s equipment insurance is one subset of inland marine insurance that applies only to contractor’s equipment. If you’re a photographer, for example, you’d get a different type of inland marine insurance.
What’s Covered Under Contractor’s Equipment Insurance?
Contractor’s equipment insurance covers both large, expensive equipment and smaller, specialized tools, like:
- Track hoes
- Forklifts
- Nail guns
- Sanders
- Computer equipment
- Data and media
It can pay for replacements and repairs if your tools or equipment are:
- Damaged by an accident or vandalism, such as falling objects, smoke, and water damage
- Hit by natural disasters, like windstorms, fires and floods
- Stolen
- Lost
With equipment insurance, you’re typically covered for the equipment you own, along with employee tools, clothing, and safety supplies essential to your work. The catch is that you have to list out all your tools, including their make, model, and serial number, if they’re over a certain value (such as $2,500) to get coverage for them.
You can list your current equipment to start and add new equipment to your policy later on. Otherwise, those tools may fall under your policy’s blanket coverage, which gives a per item and per occurrence limit for miscellaneous tools not specifically listed in the policy.
For example, insurers may only cover up to $500 per item and up to $10,000 total for any one claim. Ask your insurance broker what your blanket coverage options are. Pay attention to whether you have actual cost value coverage (ACV) or replacement cost coverage. There’s a big difference in what your reimbursement can be. ACV only replaces lost property at its value when it went missing—which may be much less than needed when buying the same item and brand.
Replacement cost doesn’t consider wear and tear over the years. Instead, your insurer reimburses you for the amount needed to replace your old item with one that’s the same or similar when new. This coverage costs more—but also may pay for itself if you have a loss. For an added fee, your insurance company might also cover expenses related to the loss, like cleaning up debris, paying for fire department services or speeding up a project that fell behind after a loss.
You may be able to get additional coverage for borrowed equipment if your policy doesn’t already include it.
What’s Not Covered by Equipment Insurance?
Every policy is different, but there are some common exclusions to keep in mind as you shop for the perfect equipment coverage. For example, wear and tear usually isn’t covered.
Also, your equipment might not be covered if:
- It’s too old: Some insurers don’t cover equipment over a certain age, such as five years.
- It’s unlisted: Items not specifically listed out in your policy usually come with special terms.
- It’s a new purchase: If you buy equipment after getting a contractor’s equipment policy, it’s usually covered for a short period of time. After that, you might need to name that tool in your policy to get full coverage for it.
Make sure the policy fits your special insurance needs. For example, if your small business relies on rental equipment, take a closer look at your policy terms.
If you’re lucky, your insurance company will include coverage for an equipment rental by default. But some policies charge extra for rented equipment, and some don’t cover them at all.
How Much Does an Equipment Insurance Policy Cost?
Equipment insurance generally has relatively low monthly premiums—anything from $13 to $70+ per month might be a reasonable amount to pay, depending on where you live, how pricey your equipment is, your claims history, and more.
For large equipment, the insurance cost varies depending on the type of equipment and its replacement value. Don’t be surprised if your policy comes with a deductible.
Don’t Leave Your Equipment Unprotected
A contractor’s equipment policy is smart for any small business owner, especially if your crew regularly moves equipment between worksites. You get peace of mind knowing you won’t have to pay as much out of pocket for loss or damage. All that you might owe is your deductible.
Not to mention, damaged or stolen property can seriously slow down progress, even in the short term. When it’s time to make a claim, a good equipment insurance policy pays for reimbursements quickly—getting your business up and running at full speed again in no time.
1. Introducing Yourself
Your introductory email needs to pack a lot of information into a small package. Try something like this:
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Hello Jane,
My name is John Doe and I work for ABC Agency, where we provide business insurance policies to many of Dallas' rockstar small businesses.
Congratulations on your new business, Jane's Bakery. Are you wondering if you have all the insurance you need? Or if your policies will really cover you in a pinch?
At ABC Agency, we pride ourselves on providing robust, comprehensive coverage options to companies like yours with flexible, pay-as-you-go plans.
Are you available this week to talk more about how we can help? I can help you find the most affordable rates and the best policies out there.
I look forward to speaking with you soon.
Cheers,
John Doe
2. Presenting a Quote
Once you've met with your potential client, a quick reply with their quote will get the ball rolling.
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Hi Jane,
Thanks so much for meeting with me this morning. I loved touring Jane's Bakery–I can still smell those delicious chocolate chip cookies baking! You have a great location, and I'm sure you're going to do great on Front St.
After reviewing my notes, I've pulled together an insurance quote for you (attached). I recommend a business owner's policy. A BOP includes several insurance products in one: liability, property insurance, and business interruption insurance. It offers robust coverage at a competitive price.
I'll call you in a few days to see what you think about this insurance plan. In the meantime, if you have any questions, don't hesitate to email me or call me at [phone number].
Again, thank you for your time today. I look forward to working with you in the future.
Cheers,
John Doe
3. Thanks for Purchasing a Policy
Gratitude is important! It's never a bad idea to thank your clients for their business.
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Hi Jane,
Thank you for choosing a business owner's policy with ABC Agency. We know it's so important to get the right coverage for your business, and we are honoured you've placed your trust in us.
We're excited to work closely with you, and our no. 1 goal is to make sure you're business is always protected.
Do you have any questions? We are here to help. Reach out whenever something comes to mind.
Thank you again for choosing ABC Agency to insure Jane's Bakery.
Cheers,
John Doe
4. Welcome Email
A welcome email helps clients feel like you're there to help–and can softly pitch other insurance products you offer.
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Dear Jane,
Welcome to the ABC family! We are thrilled to have you as a new customer and can't wait to meet all of your insurance needs.
As an independent insurance agency, we work with multiple insurance providers to find the best coverage options for all our customers. If you need any other type of insurance–like [include additional offerings unique to your agency, like life insurance, health insurance, home insurance or anything else]–we can help you too.
Do you want to discuss any of these policies?
Cheers,
John Doe
5. Introducing a New Product
A happy client may want to expand their business with you.
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Hello Jane,
I hope all is well with you and Jane's Bakery. I stopped in yesterday for a blueberry muffin and coffee, and they were delicious. I loved the hint of cinnamon in the muffin! Was that your idea?
I wanted you to be the first to know we are now offering commercial vehicle insurance to our policyholders. Auto insurance for your catering vans is super important since your personal car insurance won't cover them.
We're offering this insurance coverage solely to our current business clients at the moment and have some very competitive rates.
Would you like me to work up a quote for you?
As always, thanks so much for being a part of the ABC family.
Cheers,
John Doe
6. Asking For Referrals
Once your relationship is established and comfortable, let your clients help you grow.
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Hi Jane,
You've been a valuable member of the ABC family for two years now, and we so appreciate your business–not to mention the muffins you supply for our monthly meetings!
Because you are a valued policyholder, I wanted to ask a quick favour. I know you are active in the local Chamber of Commerce, and I'm hoping you might know some colleagues who would benefit from working with our insurance company.
Referrals are one of the most effective ways to connect with our community since people really trust their friends, family and colleagues. Is there anyone you'd recommend I speak with?
Remember that in addition to business insurance products, we offer everything from life insurance policies to pet insurance.
As a thank you for your help, we will send you an Amazon gift card of $100 when your referrals buy insurance from us.
Thanks so much for your help!
Cheers,
John Doe
7. Policy Renewal
If your client needs to renew their policy with you, send an email like this:
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Hi Jane,
I hope you're doing well! What a year it's been—from being listed as one of the top 5 bakeries in Dallas to being an official vendor for the city—you have so much to be proud of.
Just a heads up that your business owner's policy is up for renewal soon and will expire on June 15, 2023.
If you're still happy with the coverage, we can easily renew it for you.
Do you have some time to chat this week?
Looking forward to serving you again!
Cheers,
John Doe