Tools & Equipment Insurance for Arizona Contractors

Arizona contractors depend on their tools and equipment to get the job done – from small hand tools to power tools, motorized equipment, and safety gear. If the tools and equipment are damaged or stolen, contractors cannot complete the project, losing time and money, as well as potential customers.

Tools & Equipment Insurance Application

For example, carpenters can’t work without toolboxes, handsaws, circular saws, jigsaws, hammers, chisels, power drills, and measuring tools. Roofers need nail guns, compressors, harnesses, roofing hammers, and shingle cutters. Landscapers require lawnmowers, trimmers, tractors, pruners and loppers, irrigation systems, and copper wires. When on a job, electricians need power drills, insulated pliers and screwdrivers, voltage testers, clamp meters, multimeters, cable cutters, wire strippers, and other tools.

Contractor tools and equipment are expensive; without the proper insurance, replacing them and returning to work can take time. To protect your tools and equipment, be sure you have a Contractor’s Tools & Equipment policy as part of your insurance program. General Liability, Property, or Auto insurance doesn’t cover your off-site tools and equipment if damaged by fire, stolen, or vandalized. You need a special Inland Marine policy that protects your tools and equipment wherever you take them.  

What Contractor’s Tools & Equipment Insurance Covers

A Contractor’s Tools & Equipment policy covers theft, vandalism, or loss due to fire, wind, hail, or water. Note: general wear and tear is not included in any coverages. The policy covers mobile property wherever the tools are located. So you'll be covered if you’re working on a job in Phoenix or Scottsdale or have your tools safely locked in your truck.

The policy can be designed to include coverage for rented or borrowed tools and machinery.

Depending on your needs, you can choose to buy a policy written on a replacement cost or actual cash value basis.

Replacement Cost Coverage (RC) is a predetermined amount that determines the value of tools and equipment, establishing in advance the amount an insurance company will pay in the event of a covered loss. Actual Cash Value Coverage (ACV) pays for damaged or stolen property at depreciated value. Depreciation is calculated by determining the replacement cost of the loss and subtracting value based on the age and type of tool, as well as assumed wear and tear. 

Choosing whether to purchase RC or ACV coverage will depend on the tools and equipment being covered and the requirements of a bank or leasing business if the equipment is financed. If your equipment is financed or rented from a location that requires insurance, let your insurance agent know. This ensures that the policy’s limitations reflect the requirements outlined in the lease or loan contracts.

Miscellaneous Coverage: Miscellaneous coverage provides blanket coverage for a broad category of tools (like hand tools, power tools and small portable equipment like drills, saws and nail guns) that are typically lower in value and not individually listed on the policy.

Scheduled Coverage: This requires contractors to list each piece of high-value equipment individually on the policy and its value.

In Arizona, tools worth more than $1,000 must be scheduled on the policy.

How Much Does Contractor’s Tools & Equipment Cost?

The cost of a Contractor’s Tools & Equipment policy will vary based on coverage amount, coverage type, deductibles, coverage extensions, tool or equipment type, security measures, and insurance requirements. To cover basic contractor hand tools, the price of a policy ranges from $199 to $600. The cost for larger equipment coverage varies greatly based on that equipment's year, make, model, and replacement value. 

The following costs are general estimates: