One of the biggest headaches for contractors is equipment and tool theft, as thieves regularly raid worksites after hours or steal tools from parked vehicles. They can make away with tens of thousands of dollars worth of equipment, and in serious cases it can result in project delays and workers unable to do their jobs.

Also, if the theft occurs away from the contractor’s own facilities and instead at a worksite or while the equipment is in transit, the company’s commercial property insurance policy won’t cover the theft.

However, there is a policy that will cover these types of thefts: tool and equipment insurance. While you should consider this inexpensive coverage, you should also take steps to safeguard your stuff.




How the insurance works

Typically, commercial property insurance only covers your equipment when kept within your premises. Tool and equipment coverage is a special type of insurance known as inland marine insurance; it covers movable equipment and tools wherever you’ve stored them.

It typically covers theft, vandalism, accidental damage, and loss of tools and equipment while they are on-site, in transit or stored at a designated location.

Some policies may offer coverage for the cost of renting replacement tools or equipment to minimize project disruptions. Others include provisions that compensate you for lost income and costs incurred due to project delay if these are caused by a covered incident.

Policies typically cover tools and equipment worth up to $10,000. If the value of everything is more than $5,000, the insurer will often require that all of the items are inventoried and scheduled on the policy.

However, the insurance won’t cover:

  • Usual wear and tear on equipment and tools
  • Tools that are over five years old.
  • Damage resulting from deliberate misuse or breakage.


If you have extremely high-value tools and equipment, you would likely need to get a separate specialized policy.


Prevention tips

Besides insurance, the best approach is to avoid having your tools and equipment stolen in the first place. Fortunately, there are steps you can take to reduce the chances of theft.

Secure equipment and tools — If you must store your equipment on-site, set aside a section of your site where you can store the gear in locked, secure storage containers when not in use. Ensure these containers are well-constructed and tamper-proof and cannot be moved. Keep in mind that tool trailers are often stolen.

Install security cameras and alarms — Security cameras and alarms, along with signs announcing their presence, can help deter thieves. Cameras also can provide evidence of theft and alarms can alert your workers of intrusions.

Implement asset marking and tracking — Adopt asset-management solutions with telematics to discourage theft and aid in recovery if equipment is stolen. Implement tracking devices on high-value assets to enable real-time location monitoring. Visibly displaying that equipment is tracked and monitored can deter theft.

Create a reporting system for missing tools — Implement a system so that employees can report missing tools. A well-designed reporting system can help track any misplaced tools, while addressing issues like theft or inaccuracies with inventory as soon as they are discovered.

Train your staff — Devote an afternoon to discuss best practices in van and tool safety and security with your team. Additionally, ensure that new staff members are informed about these measures to maintain a vigilant and secure work environment.

Conduct employee background checks — Conducting background checks during the hiring process can help combat theft on your construction site. Background checks not only verify the qualifications and past work history of potential employees, but detect any known criminal activity as well.

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