Equipment Insurance: Everything Your Business Needs To Know

Camino Financial16 Nov 2023
Equipment Insurance: Everything Your Business Needs To Know
Equipment insurance is essential for businesses, as it protects valuable investments necessary for daily operations. This article explains everything you need to know about it, like what tools you should protect, its importance, who should do it, and how to get it.

What Is Insurance For Equipment?

This is a form of protection for physical assets. It acts as a safety net in case of damage to your insured business equipment and tools. While this kind of specific insurance does not always cover every possibility, it usually covers damage caused by unforeseen events, such as theft, fire, or natural disasters. The exact insurance coverage of one of these plans will vary depending on the insurance company, but we will discuss a few common characteristics further down.
#DidYouKnow It is ideal for independent and self-employed workers because, unlike commercial property insurance, it covers equipment transported to a different location from your business's home base.

Why Is Insurance On Equipment Important For Businesses?

Although no business owner ever wants to consider the possible damages to their equipment, equipment coverage sometimes provides invaluable and cost-savvy protection. From small entrepreneurs to industrial contractors, insurance for equipment can be the protection that can save a business. Consider what would happen if fallen boulders damaged your excavator from an earthquake on a construction job site. Do you know how much it would cost to repair that? Spending that much money could hurt your business and ruin your financial forecast. Well, industrial equipment insurance would cover that damage.

What Does Business Equipment Insurance Cover?

Equipment insurance can cover various things, but the specific items a policy covers will vary with each provider. Nonetheless, basic coverage will cover your business tools, such as lawnmowers and leaf blowers, safety supplies, employee tools and clothing, and other items. If you need more than that, heavy equipment insurance will specifically focus on ensuring heavy machinery, such as excavators and tractors. Here are a few examples of tools and equipment that an insurance policy might cover:
  • Saws
  • Sanding tools
  • Ladders
  • Workbenches
  • Power drills
  • Blow torches
  • Stand lights
  • Musical instruments
  • Hedge trimmers
  • Vacuum cleaners
  • Cameras
  • And much, much more.

What Isn't Covered?

Equipment insurance generally does not cover damage to tools caused by normal wear and tear. Moreover, rust and mold damage is not covered. It does not cover items not directly involved in your work–such as your phone or car. Typically, this insurance will only cover damage from accidents and natural disasters, so it does not cover any other damage caused by neglect or poor repair jobs.

Does Equipment Insurance Cover Borrowed Or Leased Equipment?

The precise coverage areas of an equipment and tools insurance policy will depend on the provider's rules. Many providers will cover borrowed or rented equipment as long as there is a written agreement between the equipment owner and the renter or borrower. On the other hand, some providers differentiate between rented and borrowed equipment and will cover borrowed tools but not rental equipment.
#CaminoTip Check with your policy provider if they cover rented or borrowed equipment.

What Businesses Need Insurance For Tools And Equipment?

Insuring equipment is a wise choice for any business owner that brings equipment or tools to another location and uses them to perform their work. This includes self-employed workers, independent contractors, and small business owners in many professions, such as:
  • contractors
  • landscapers
  • plumbers
  • electricians
  • cleaners
  • photographers
  • etc.
If you use different equipment to perform your work, such as a janitor operating a vacuum cleaner, you will want to get equipment insurance to protect your assets. Getting this insurance can protect you from the costs of fixing or replacing damaged tools, safeguarding your business finances. Furthermore, equipment insurance can be a good choice for large-scale contractors and other business owners that utilize tools in various locations. Heavy equipment insurance is vital for industrial contractors or farmers. For carpenters or plumbers, basic equipment insurance can be a lifesaver.

How Much Does Tool And Equipment Insurance Cost?

The cost of insurance for equipment varies, but here are some averages to give you an idea of what you can expect when you ask for a quote:
  • Contractor's tools and equipment insurance: median of $14 per month, which comes to $168 per year.
  • Basic equipment: between $12 and $45 per month.
  • Heavy equipment: between $600 and $1,200 for a $100,000 piece of equipment.
What you plan to insure will affect the cost you have to pay. For example, if you are a self-employed house cleaner, you would most likely pay around $12 monthly to insure your tools. But if you are a contractor with several employees and a lot of equipment, you would be paying those higher fees of around $25 per month and $600 for each piece of heavy equipment.

How To Get Equipment Insurance?

If you already have a general liability plan, you can contact your plan provider and ask if they offer equipment insurance as an add-on. This is one of the easiest and fastest ways, as the provider will already have all the information needed to get you a quote so you can purchase this insurance. Alternatively, you can find an equipment insurance provider online. When searching for a provider, consider the unique needs of your business, and ensure that the provider you choose will cover your tools and equipment. Once you have found the right one, you will have to request a quote after supplying some important information, including
  • the industry you are in,
  • your business's location,
  • the years you have owned the company,
  • the number of employees,
  • your expected annual revenue,
  • and your insurance and claims history.
After that, you can either purchase a plan based on the quote provided or speak with a representative to get to the purchasing phase. The following questions can help you determine if the specific equipment insurance company you are looking at provides the right insurance for you:
  • Do they cover the tools and equipment you use in your business?
  • Do they cover damages for various causes, including theft, misplacement, natural disasters, etc.?
  • Do they protect equipment transferred to another location, away from your business's facilities?
  • Can you pay the premium?
  • Do they clearly state their terms and conditions?

Other Kinds Of Business Insurance

  • General Liability Insurance. It generally covers any bodily injuries and property damage that results from your business. Equipment insurance sometimes comes as a supplement.
  • Commercial Property Insurance. It covers all of your business's physical assets. Unlike equipment insurance, this coverage is usually limited to your company's facilities, so you cannot take it elsewhere. You can add equipment insurance to the business owner's policy.
  • Inland Marine Insurance. Larger companies with equipment and tools worth a significant amount of money typically use this policy to cover equipment and tools transported on land.

Finance Your Business's Equipment Insurance

With equipment insurance, you can have peace of mind knowing you have insured your assets and that your business will never lose out when an unexpected accident happens. And while it's almost always a must, some businesses can't afford it. That's why companies should consider applying for a small business equipment loan to help finance their business insurance. This can be an excellent way to alleviate the financial burden of paying for expensive costs upfront. Plus, with competitive interest rates and fixed repayment plans tailored to your needs, a business loan could help you protect your company from unexpected losses. If you're looking for a way to finance your business insurance, consider applying for a business loan today. With the right loan provider, you can have the peace of mind that comes from knowing you're protecting your company from any unpredictable losses. Apply For A Business Loan!  


What is an equipment insurance policy?

An insurance policy covers the equipment and tools business owners use to perform their work. It usually covers damages caused by theft, fire, misplacement, vandalism, and natural disasters.

What is equipment insurance called?

It has several names:
  • contractor's tools and equipment insurance
  • heavy equipment insurance
  • equipment breakdown insurance
  • basic equipment insurance

What is heavy equipment insurance?

Heavy equipment insurance covers heavy machinery, such as excavators and tractors, and is typically paid per piece of equipment. For example, you would pay $800 as the insurance premium for an excavator.

Can I ensure my work tools?

You can ensure your work tools are under an equipment insurance policy, which would cover them. However, this type of insurance would not cover tools damaged by rust, mold, poor repair jobs, or any other wear and tear.

What is industrial equipment insurance?

Industrial equipment insurance is a specialized form of insurance that covers the unique risks associated with businesses that use large, expensive industrial equipment. This type of insurance policy protects companies from the financial impact of unexpected losses or damages to their machinery and other industrial assets due to the following:
  • accidents
  • mechanical breakdowns
  • theft
  • fire/explosion damage
  • natural disasters
  • etc.

Prequalify in
5 minutes

Select your desired loan type.

Latest Articles

Prequalify in 5 minutes

  • Stay connected

    Join a community of over 40,000 micro-entrepreneurs for access to informative resources, helpful tips, and best practices on growing your business

  • Mission-driven company

    Camino Financial is a nationally certified Community Development Financial Institution (CDFI) with oversight by the U.S. Department of Treasury. By partnering with other mission-aligned organizations, Camino Financial is able to pool and distribute low-cost funding and educational resources to underbanked minority-owned businesses. Camino Financial is headquartered in Los Angeles, California with supporting offices in Mexico City, Mexico.

© 2024 by Camino Financial, Inc. All Rights Reserved. Camino Financial is a Licensed Finance Lender & Broker in California under its subsidiary Salas & Company LLC.
Camino Financial Better Business Bureau A+ accredited businessCloudflare

11501 Sunset Hills Rd, Reston, VA 20190 || Tel (800) 852-0655

NMLS License: Salas & Company LLC #2186459 | CFL License: Salas & Company LLC (DBA Camino Financial) #60DBO-43053

CDFI Certification Number: 181CE054231