Tools & Equipment Insurance for Washington State Contractors

Contractors in Washington State across all trades depend on their tools and equipment for their daily operations. These assets, from power drills and saws to heavy machinery, represent significant investments and are critical to finishing projects. If tools or equipment are damaged, it can lead to financial setbacks, project delays, and lost revenue. Contractor’s Tools & Equipment insurance protects these valuable assets from theft, damage, and other risks that could disrupt business operations.

Tools & Equipment Insurance Application

Why You Need Contractor’s Tools & Equipment Insurance

Many contractors mistakenly think their General Liability, Auto, or Property insurance policies will cover tools and equipment. However, these policies typically exclude or limit coverage for tools and equipment. A Property policy covers equipment at your company location, such as your office, but not tools and equipment at a job site, in transit, or in your truck or van.  

Specialized coverage is required for several reasons:

• Job sites, work vans, and storage facilities are prime targets for theft. Stolen tools can lead to costly replacements and project delays.
• Tools and equipment can be exposed to fire damage or loss from wind, hail, or water.

Without proper insurance, you could face significant financial losses if your tools and equipment are stolen, vandalized, or damaged in a fire or other type of peril.

What Are the Most Common Types of Tools Stolen?

Theft of contractor tools is a widespread problem, and specific trades are more vulnerable due to the value and portability of their equipment. Following is an example of the common types of tools stolen by trade:

• Plumbers: Pipe threaders, drain cleaning machines, pipe cutters, wrenches, soldering torches
• Electricians: Power drills, multimeters, wire strippers, conduit benders, circuit testers
• Roofers: Nail guns, compressors, harnesses, roofing hammers, shingle cutters.
• General Contractors: Circular saws, drills, impact drivers, toolboxes, ladders
• Landscapers: Chainsaws, leaf blowers, hedge trimmers, lawnmowers, weed eaters
• Drywallers: Drywall lifts, screw guns, taping tools, stilts, sanding machines

What Does Contractor’s Tools & Equipment Insurance Cover?

A Contractor’s Tools & Equipment policy can be designed to cover owned, leased, or rented tools and equipment essential for a contractor’s work. Coverage typically includes:

• Theft: Covers stolen tools from a job site, vehicle, or storage area.
• Damage from Fire, Vandalism, and Weather Events: Protects against fire and vandalism and certain weather-related damages, like wind, hail, and flood.
• Equipment in Transit – Covers tools and equipment being transported between job sites.
• Rental Equipment – Can include coverage for rented or borrowed tools and machinery.

Note: The policy doesn’t cover general wear and tear.

Your Choice: Replacement Cost vs. Actual Cash Value (ACV)

A Contractor’s Tools & Equipment policy can be written two ways:

• Replacement Cost Coverage (RC): Pays for a brand-new replacement of the stolen or damaged tools, ensuring the contractor can continue working without additional financial burden. Replacement cost is ideal for newer tools.
• Actual Cash Value (ACV): Pays only the depreciated value of the tool at the time of loss. While ACV coverage is often less expensive, it may not provide enough reimbursement to replace stolen or damaged tools fully.

When deciding whether to obtain RC or ACV coverage, consider the tools and equipment being covered, as well as the requirements of a bank or leasing company if the equipment is financed. If your equipment was financed or rented from a location that requires insurance, call your insurance agent. This ensures that the policy’s limits align with the requirements specified in the lease or loan contracts.

Blanket vs. Scheduled Coverage

Tools and equipment can be covered on a blanket basis, which means they are not separately listed on the policy. Typically, this is for tools and equipment that are lower in value. In Washington State, tools and equipment valued at $1,000 or less can be insured on a blanket basis.

Scheduled coverage is for more expensive tools and equipment and requires that each piece is listed on the policy.

How Much Does a Contractor’s Tools & Equipment Policy Cost?

The premium for Contractor’s Tools & Equipment insurance will vary based on coverage amount, coverage type, deductibles, coverage extensions, tool or equipment type, security measures, and insurance requirements. The policy costs anywhere from $199 to $600 to cover basic contractor hand tools. Premiums for larger equipment vary greatly depending on the equipment's year, make, model, and replacement value. 

The following costs are general estimates: