As a busy business owner, you wear many hats from creative to sales. While your time may be limited, it is important to learn about your business’s insurance coverage. Depending on the nature of your company, you may already have obtained commercial auto insurance. Equipment coverage can be an essential add-on policy for businesses that lean heavily on specific tools, equipment, and machinery to conduct their operations.
What Is equipment insurance coverage?
After determining whether or not your business requires commercial auto coverage you should assess your need for equipment coverage. Equipment coverage is a business policy that can potentially pay out up to the cost of repairing or replacing essential tools or equipment if they are involved in a covered incident. This type of coverage can extend to anything from small devices such as a laptop to heavy machinery.
Examples of equipment coverage include:
- Hand tools such as axes, chisels, digging bars, and hammers.
- Power tools such as air compressors, angle grinders, biscuit joiners, and drills.
- Heavy machinery like backhoes, bulldozers, cement mixers, compactors, cranes, and forklifts.
- Clothing and protective gear such as hardhats and visibility vests.
- Computer equipment like monitors, laptops, tablets, and projectors.
An important distinction of equipment insurance coverage is that it is a type of Inland Marine insurance. This means it only covers movable items, typically tools that go back and forth from your business's primary office or location to other job sites. It covers items only when they are on or stored at job sites.
Equipment coverage is important in any business that relies on movable gear or tools to fulfill contracts or operations.
Forgoing this type of coverage could mean you would be financially liable if any of the following scenarios arise:
- Your collection of hand tools was stolen from a storage facility.
- An employee accidentally breaks a power drill while at work.
Who needs equipment coverage?
Wondering if your business could benefit from equipment coverage? Businesses that typically rely on this type of insurance include cleaning services, construction, landscaping, HVAC companies, plumbing, and carpentry businesses. Also, any business that relies heavily on electronic devices such as laptops, tablets, etc.
What does equipment coverage include?
Equipment coverage may seem simple, but since this type of policy can overlap with some of your existing business coverage, it is important to review coverage details. As previously mentioned, equipment coverage will usually cover costs incurred by theft, vandalism, accidental damage, and natural disasters.*
*Please note that actual coverage for natural disasters varies depending on your location. You need to consult your provider as some policies do not automatically extend to flooding and earthquake damage.
Generally, equipment coverage includes:
- Repair and replacement costs.
- Loss of income if damaged or stolen equipment has caused your operations to stop.
- Additional expenses due to project delays caused by damaged equipment.
- Clean-up and debris removal
Remember that equipment coverage will not cover every device or tool used for your business. Typical equipment coverage exclusions include:
- Normal wear and tear
- Intentional damage to tools or equipment by staff
- Electrical and mechanical breakdown of devices
- Stationary equipment
- Commercial vehicles
Equipment coverage costs are calculated by considering many factors. Typically, this type of policy sticks to a coverage limit of $10,000. However, depending on the equipment's nature, it could be possible to raise this limit. Your provider will consider factors such as the price of your gear, period of use, where your business operates, and where you store your gear to determine your premium.
How to determine if you need equipment coverage
For a small business, shutting down operations due to a damaged forklift or drill could be the kiss of death. Nevertheless, taking out several coverage policies for your business can quickly add up. To determine if you require equipment coverage you should assess your equipment and estimate the value of repairing and/or replacing these items. Take time to evaluate your financial situation and tolerance for risk. In addition, keep in mind that equipment coverage may also extend to covering costs related to loss of income if your equipment is so damaged you must delay or cancel a project. If you run a landscaping or construction business that relies heavily on standard tools and machinery, equipment coverage could be a worthwhile investment.
How to add equipment coverage to your policy
Ready to add equipment coverage to your policy? The first step is calling up your current provider and discussing your business options. You will be asked to provide detailed information for the assets you wish to insure such as the year, make, model, condition, and serial number. In addition, you will need documentation of the equipment such as purchase records, receipts, and maintenance records. Depending on the type of equipment, your provider could even ask for an on-site inspection as part of the appraisal process. Equipment valuation can be done through many methods - from sales comparison to income. As a result, it is important to keep updated records and receipts detailing all modifications and take care of your tools and special equipment.
Benefits of equipment coverage
No one plans for a storage facility break-in or vandalism, but freak accidents such as these can easily lead to stolen, damaged, or even destroyed equipment. If your business depends on bulldozers and mobile cement mixers to fulfill contracts, equipment coverage may offset the costs of repairing or replacing these damaged or stolen items. For construction and landscape businesses, tools and gear are essential investments that keep your profits flowing. Equipment insurance coverage may offer peace of mind and may allow you to avoid substantial out-of-pocket expenses for repairs or replacements in the future. Depending on the nature of your business, equipment coverage can also complement your existing commercial auto policy. For example, if you have equipment that is permanently attached to your vehicle, such as ladder racks or a pressure washer, it may be included under your commercial policy.
Equipment insurance coverage allows you to develop a plan to secure some of your business's most important assets in the event of a worst-case scenario or mishap.
If you are interested in securing your business assets, including commercial vehicles, why not reach out to Infinity Insurance Agency (IIA) today? Call 1-855-478-3705 to speak to a trusted agent and receive a free estimate.