Construction equipment insurance is NOT covered by your Commercial Property policy once the equipment leaves your business premises. You need Inland Marine (also called Contractors Equipment Floater or Equipment Floater) to cover jobsite theft, vandalism, transit damage, fire, flood, collision, mechanical breakdown, and equipment damage on owned, rented, leased, or borrowed construction tools + heavy equipment. Typical cost: $150–$650/year for tools + small equipment ($5K–$25K limit); $400–$1,500/year for mid-size equipment (skid steers, mini-excavators); $800– $3,500+/year for heavy equipment (excavators, bulldozers, cranes). Different from Builders Risk (covers the building under construction) and from Commercial Auto (covers vehicle liability + physical damage on registered vehicles).
Construction equipment insurance is the most-missed coverage in small contractor insurance. Your General Liability covers third parties; your Commercial Auto covers registered vehicles; your Commercial Property covers items at your owned office or warehouse. None of these cover the $35,000 skid steer parked overnight at a jobsite — that's Inland Marine territory, and it's where contractor businesses lose the most uninsured equipment-claim dollars. Source: The Hartford 2026, Travelers 2026, Cincinnati Insurance 2026, NEXT Insurance 2026, Hiscox 2026, Inland Marine Underwriters Association 2024, NER 2024 Equipment Theft Report.
equipment class
equipment theft losses
recovered by police
distinct from Property
What is construction equipment insurance?
Construction equipment insurance is most commonly an Inland Marine policy — sometimes called Contractors Equipment Floater or Equipment Floater. It's first-party coverage protecting YOUR construction tools + equipment against physical loss while they're off-premises: at jobsites, in transit, in storage yards, or temporarily at a third-party location.
- Owned equipment — tools you own (drills, saws, generators) + heavy equipment (skid steers, excavators, trenchers, dump trucks).
- Rented + leased equipment — coverage for equipment rented from United Rentals / Sunbelt / Home Depot Rentals / local yards. Standard rental contracts often require this coverage as a condition of rental.
- Borrowed equipment — temporarily borrowed from a sub or peer contractor.
- Equipment in your care, custody, or control — when a customer's equipment is at your jobsite under your responsibility.
- Newly acquired equipment — typically auto-covered for 30-90 days from purchase under a "newly acquired" provision, giving you time to formally schedule it.
Inland Marine vs Builders Risk vs Commercial Property
Three different first-party coverages contractors confuse routinely. Each covers a different exposure:
| Inland Marine / Equipment Floater | Builders Risk | Commercial Property | |
|---|---|---|---|
| What it covers | YOUR construction tools + equipment off-premises (jobsites, transit, storage) | The BUILDING UNDER CONSTRUCTION (structure, materials installed/staged on the project site) | YOUR owned property AT your business premises (office, warehouse, etc.) |
| Coverage trigger | Physical loss to equipment from theft, vandalism, fire, transit accident, etc. | Physical loss to the structure being built from fire, theft, vandalism, weather, storm, etc. | Physical loss to YOUR business property at the insured premises |
| Typical premium | $150–$3,500/year depending on equipment value + class | 1-4% of total project value, paid upfront for project duration | $600–$2,500/year depending on building value + contents |
| Buying basis | Annual policy, scheduled or blanket | Per-project, paid upfront for project duration | Annual policy |
| Required by | Rental contracts (Sunbelt, United Rentals, etc.); leased-equipment finance companies; some commercial contracts | Construction lenders (almost universally); some commercial contracts | Mortgage lenders; commercial leases |
Most contractors need BOTH Inland Marine + (project-specific) Builders Risk + Commercial Property — they cover three distinct exposures with no overlap. See our Contractor Insurance pillar for the full coverage-stack breakdown.
Scheduled vs blanket (unscheduled) coverage
Inland Marine policies offer two scheduling structures. The choice depends on equipment turnover + total fleet size:
| Scheduled | Blanket / Unscheduled | |
|---|---|---|
| How it works | Each piece of equipment listed individually on a schedule with serial number + value + per-item limit | Aggregate limit applies to ALL equipment up to the policy total, no individual scheduling required |
| Best for | Few high-value items (skid steer, excavator, generator $5K+) where individual claim-value documentation matters | High-turnover small tools + hand-held equipment (drills, saws, levels, jackhammers, etc.) where individual scheduling is impractical |
| Cost | Lower per-dollar-of-coverage (precise risk pricing) | Higher per-dollar (carrier prices to total inventory churn) |
| Claim documentation | Easier — scheduled item is on file | Requires inventory documentation at time of loss (photos + purchase receipts essential) |
| Per-item sublimit | Each scheduled item has its own limit | Often capped at $1,500-$10,000 per individual item even within a larger blanket limit |
Most small contractors use a hybrid approach: scheduled coverage for high-value individual items ($5K+) + blanket coverage for the broader tool inventory. This optimizes premium while keeping claim documentation manageable.
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Rented + leased + borrowed equipment
Rented and leased equipment is one of the biggest gap areas in contractor insurance. Most contractors assume the rental contract OR their owned-equipment policy covers it — usually neither does fully.
- Rented equipment (Sunbelt, United Rentals, Home Depot Rentals) — most rental contracts shift FULL responsibility for damage / theft / loss to the renter. Rental companies offer their own coverage (typically 10-15% of rental fee) but it's often expensive and exclusion-heavy. Your Inland Marine policy can cover rented equipment for a fraction of the cost if the rented-equipment-coverage provision is added (typical: $0-$200/year add-on).
- Leased equipment (long-term financing) — finance companies (Caterpillar Financial, John Deere Financial, etc.) require continuous coverage as a condition of the lease. Coverage typically follows the lease term + names the finance company as loss payee.
- Borrowed equipment — temporarily borrowed from a sub or peer contractor. Your Inland Marine covers it if "borrowed equipment" provision is on the policy + the borrowed item is in your care/custody/control.
- Subcontractor equipment — when subs bring their own equipment to your jobsite, THEIR insurance should cover it. Get a Certificate of Insurance from every sub showing their own Inland Marine coverage to avoid gaps when sub equipment is damaged at YOUR job.
Cost by equipment class
Construction equipment insurance cost is primarily driven by total equipment value + claim history + theft risk by class. Sample annual ranges for typical small contractor inventory:
| Equipment class | Typical value | Annual premium range |
|---|---|---|
| Hand tools + small power tools (blanket) | $5,000–$25,000 inventory | $150–$650 |
| Generators, compressors, welders, light towers | $3,000–$15,000 each | $120–$480/year per scheduled item |
| Skid steer, mini-excavator, trencher | $25,000–$75,000 each | $400–$1,500/year per scheduled item |
| Backhoe, full-size excavator, bulldozer | $75,000–$350,000 each | $800–$3,500/year per scheduled item |
| Crane, large equipment, specialty rigs | $300,000–$2M+ each | $2,500–$15,000+/year per scheduled item |
| Tilt-trailer, dump trailer (non-self-propelled) | $8,000–$50,000 each | $180–$650/year per scheduled item |
| Tools-in-truck (mobile mechanics, technicians) | $3,000–$15,000 inventory | $200–$550/year |
| Solar / wind / specialty equipment | varies widely | specialty quote required |
Per the Inland Marine Underwriters Association + carrier filings, median small-contractor Inland Marine premium runs $300-$1,200/year for typical $25K-$100K equipment inventory across owned + a few rented items.
What's NOT covered (common exclusions)
Standard Inland Marine policies exclude or require separate endorsements for these scenarios:
- Equipment wear and tear / gradual deterioration — normal use isn't a covered peril. Mechanical breakdown from internal failure (not external cause) is typically excluded unless Equipment Breakdown endorsement is added.
- Employee theft — covered by Fidelity Bond / Crime separately, NOT Inland Marine.
- Damage to equipment caused by faulty workmanship — your own operating mistake. Some policies cover; many exclude.
- Equipment used outside listed territory — most policies are US-only by default; Mexico + Canada need endorsements.
- Specific operations exclusions — underground operations, drilling, demolition, underwater work, blasting may require specialty endorsements.
- Cargo or freight being transported — that's Motor Truck Cargo coverage on Commercial Auto, NOT Inland Marine.
- Damage during transport on Commercial Auto — Inland Marine kicks in once the equipment is unloaded / staged. Commercial Auto Physical Damage covers it while strapped to the truck.
- Property of others not in your care — Inland Marine covers others' property ONLY when it's in your care/custody/control on YOUR jobsite.
Frequently Asked Questions
Does my Commercial Property policy cover my tools at the jobsite?
No. Standard Commercial Property policies cover property AT your insured premises only. The moment a tool or piece of equipment leaves your office or warehouse — heading to a jobsite, in your truck, at a storage yard — Commercial Property excludes it. You need Inland Marine (also called Equipment Floater or Contractors Equipment Floater) to cover off-premises equipment. This is the single most-missed coverage in contractor insurance. Typical cost: $150-$650/year for $5K-$25K of tools.
What's the difference between Inland Marine and Builders Risk?
They cover different things. Inland Marine covers YOUR construction tools + equipment off-premises (at jobsites, in transit, in storage). It's an annual policy that travels with your equipment. Builders Risk covers the BUILDING UNDER CONSTRUCTION ITSELF (the structure, materials installed/staged on the project site). Builders Risk is per-project, paid upfront for the project duration (typically 1-4% of project value). Both are required for most commercial contractors — they cover three distinct exposures with no overlap (along with Commercial Property for owned-premises property).
How much does construction equipment insurance cost?
Highly equipment-dependent. Tools + small equipment (drills, saws, generators, $5K-$25K inventory): $150-$650/year blanket. Mid-size equipment (skid steer, mini-excavator, trencher, $25K-$75K each): $400-$1,500/year per scheduled item. Heavy equipment (backhoe, full excavator, bulldozer, $75K-$350K each): $800-$3,500/year per scheduled item. Crane + specialty ($300K-$2M+ each): $2,500-$15,000+/year. Median small-contractor Inland Marine premium runs $300-$1,200/year for typical $25K-$100K equipment inventory.
Should I use scheduled or blanket coverage?
Most small contractors use a hybrid approach: scheduled coverage for high-value individual items ($5K+) + blanket coverage for the broader tool inventory. Scheduled coverage = each item listed with serial number + value + per-item limit. Lower per-dollar premium; required for high-value items where individual claim documentation matters. Blanket / unscheduled = aggregate limit applies to all equipment up to policy total. Higher per-dollar premium but no individual scheduling burden — best for high-turnover small tools. Per-item sublimits typically cap blanket-only claims at $1,500-$10,000 per individual item.
Does my Inland Marine policy cover rented or leased equipment?
By default, partially. Most policies cover rented equipment when in your care, custody, or control (CCC) at your jobsite, but the coverage is often capped at a sublimit (typically $25K-$100K). For larger rented equipment OR if your contract requires you to carry coverage on rentals, add the rented-equipment provision to your policy (typical add-on cost: $0-$200/year). Leased equipment (long-term financing through Caterpillar Financial, John Deere Financial, etc.) requires continuous coverage as a lease condition — the finance company is named as loss payee on the policy. ALWAYS verify rental contracts require Inland Marine BEFORE signing — most rental companies (Sunbelt, United Rentals) require it.
What if my employee's tools are stolen from the jobsite?
Depends on ownership. If the tools belong to YOU (the business), Inland Marine covers them. If the tools belong to the EMPLOYEE personally (common in skilled trades where employees bring their own tools), the EMPLOYEE'S homeowner's / personal-property policy is the first line — but most personal policies cap tool coverage at $1,500-$5,000 + exclude commercial use. Best practices: (1) document which tools are business-owned vs employee-owned in writing; (2) consider an employee-tool endorsement on your Inland Marine (typical add-on: $50-$200/year) that extends coverage to employees' personal tools used for company work; (3) maintain a tool-inventory log with photos + receipts for both business-owned and employee-tools (essential for claim documentation).
Is mechanical breakdown covered by Inland Marine?
Standard Inland Marine policies exclude internal mechanical breakdown — the policy covers physical loss from EXTERNAL causes (theft, vandalism, fire, transit accident, etc.) but not from a generator's engine failing or an excavator's hydraulic system breaking from internal wear. To cover mechanical breakdown, add an Equipment Breakdown endorsement (typical cost: $100-$400/year). Critical for businesses dependent on specialized equipment where a breakdown means lost revenue + emergency repair costs + potential project delay penalties.
What documentation do I need to file an Inland Marine claim?
Required for fast claim resolution: (1) Purchase receipts or invoices for each item claimed (or a current inventory list for blanket coverage); (2) Serial numbers on scheduled items; (3) Photos of equipment taken BEFORE the loss (for damage documentation comparison); (4) Police report for theft claims (most carriers require within 24-72 hours); (5) Witness statements if available; (6) Replacement-cost quotes for damaged or destroyed items; (7) Subcontractor / employee statements if a third party was involved. Best practice: maintain a digital inventory with photos updated quarterly — claims are paid faster + larger when documentation is current.
Do I need separate equipment insurance if my Commercial Auto policy covers my trucks?
Yes. Commercial Auto covers the VEHICLE (the truck + trailer) + liability for the vehicle's operation. It does NOT cover the EQUIPMENT being hauled in the truck or the tools stored inside it. A skid steer being transported on a trailer is covered: (a) for trailer-related claims (collision, transit damage to the trailer) by Commercial Auto Physical Damage; (b) for theft / off-vehicle damage by Inland Marine. Tools stored inside the truck overnight are covered by Inland Marine ONLY — Commercial Auto's contents coverage typically caps at $500-$1,000 and excludes business tools entirely.
Can I add construction equipment coverage to my Business Owners Policy (BOP)?
Sometimes — but usually as a limited endorsement, not a comprehensive solution. Standard BOP property coverage caps off-premises tools at $1,000-$5,000 sublimit, which covers a few hand tools but nothing meaningful for a real contractor inventory. Most carriers offer an Inland Marine endorsement that can be added to a BOP (typical add-on: $150-$650/year for $10K-$25K limit). For larger equipment inventory or heavy equipment, a standalone Contractors Equipment Floater policy is cheaper per-dollar and gives more flexibility on scheduling + sublimits. Get quotes both ways and compare.
Quick glossary — construction equipment insurance terms
- Inland Marine
- First-party coverage for tools + equipment + property off-premises. Despite the name (historical: covered cargo "in transit on inland waterways"), modern Inland Marine covers ANY mobile property off-premises — tools, equipment, fine art, jewelry, etc.
- Equipment Floater / Contractors Equipment Floater
- Common name for the construction-trade Inland Marine policy. Sometimes a standalone form, sometimes an endorsement on a larger commercial package.
- Builders Risk
- Per-project coverage for the BUILDING UNDER CONSTRUCTION itself. Different from Inland Marine, which covers the contractor's equipment, not the project structure.
- Scheduled Coverage
- Each piece of equipment listed individually with serial number + value + per-item limit. Lower premium per dollar; required for high-value individual items.
- Blanket / Unscheduled Coverage
- Aggregate limit applies to all equipment up to the policy total. Higher premium per dollar but no individual scheduling burden. Best for high-turnover small tools.
- Per-Item Sublimit
- Within a blanket policy, each individual item is typically capped at $1,500-$10,000. High-value items still need scheduling even with blanket coverage.
- Newly Acquired Equipment Provision
- Most policies auto-cover newly acquired equipment for 30-90 days from purchase, giving the insured time to formally schedule the item.
- Loss Payee
- A finance company (Caterpillar Financial, John Deere Financial) named on the policy as the party to receive claim payments on financed equipment.
- Care, Custody, & Control (CCC)
- The legal doctrine that determines when a contractor is responsible for others' property at the contractor's jobsite. Inland Marine covers CCC property up to a sublimit.
- Equipment Breakdown
- Separate coverage for INTERNAL mechanical / electrical failure (boilers, AC, generators, HVAC). Standard Inland Marine excludes internal breakdown — Equipment Breakdown endorsement fills the gap.
- Stated Value
- The policy limit set per scheduled item — the maximum the carrier will pay if the item is destroyed. Should match current replacement cost, not depreciated value.
- Replacement Cost vs Actual Cash Value
- Replacement Cost = current cost to replace new (no depreciation). ACV = replacement cost minus depreciation. RC adds 5-10% premium but pays substantially more on claims. Almost always worth it for construction equipment with 3+ year useful life.