A new excavator runs $250,000. A skid steer with attachments runs $80,000. A telehandler is $150,000. A boom lift, $90,000. The price tag is the easy part. The harder question, and the one that catches most contractors off guard, is what happens to that price tag the day a piece of equipment gets stolen, damaged, or rolled over on a jobsite.
Heavy equipment insurance is the policy that turns a six-figure loss into a deductible plus a phone call. Without it, every piece of yellow iron in your fleet is a self-funded bet against weather, theft, operator error, and the laws of physics. With it placed correctly, the financial side of an equipment loss becomes a paperwork problem instead of an existential one.
This is the full guide to how heavy equipment insurance works for contractors. What it covers, what it costs, the four decisions that move premium more than anything else, and the one coverage gap most contractors do not know about until their claim gets denied. If you would rather just have us look at your current program, call (801) 505-5500. Otherwise, here is everything you need to know.
Heavy equipment insurance is property coverage for owned, leased, rented, or borrowed mobile equipment used in construction, landscaping, agriculture, and industrial operations. It pays when YOUR equipment is damaged, stolen, vandalized, or destroyed - regardless of where the equipment is or what it is doing at the moment of loss.
It is also called contractors equipment insurance by most carriers, inland marine by most agents, and equipment floater when written as a heavy-equipment-specific schedule. All three terms refer to the same underlying policy form (ISO inland marine), configured for heavy equipment exposures.
The clean definition: heavy equipment insurance covers physical damage to equipment that meets two tests:
What it does NOT cover: liability. If your equipment causes injury to someone or damages property that does not belong to you, that is a General Liability or Business Auto claim, not a heavy equipment insurance claim. The coverage is a property policy. It pays for damage to YOUR stuff. The other policies handle harm to other people's stuff.
Carriers underwrite this coverage on a per-item basis for high-value pieces and on a blanket basis for smaller equipment. The split typically falls around the $25,000 mark. Above that, items are individually scheduled. Below it, blanket coverage handles the category.
Common scheduled heavy equipment categories:
Smaller equipment - hand tools, power tools, small generators, electronic gear - lives on the blanket inland marine schedule. Heavy equipment is the schedule.
Heavy equipment insurance is broad property coverage. The standard policy responds to direct physical loss or damage from any cause that is not specifically excluded.
Covered causes typically include:
Standard exclusions include:
The standard policy is broader than most contractors expect. The narrowing happens when the contractor or the agent picks the cheapest quote and accepts a "named perils" form (which only covers what is listed) instead of an "all risk" or "open peril" form (which covers everything except what is explicitly excluded). Always confirm you are on an open-peril form before binding. We do not place narrow forms on a contractor program if it can be helped.
Premiums typically run between 1% and 3% of the total insured value per year. That is a wide range because four factors push the rate up or down significantly.
Examples by equipment value:
The numbers above are directional. Two contractors with identical equipment can pay wildly different premiums based on the four factors below.
Where the equipment lives at night moves the premium more than almost anything else. The carrier ladder, in order of cost from highest to lowest:
If your equipment lives on the jobsite overnight, expect to pay near the top of the range. If it goes back to a fenced yard at end of shift, you are paying mid-range. If it sleeps in a building, you get the floor.
This is the decision that hurts the most when contractors get it wrong, and it is rarely explained at quote time.
Replacement Cost (RC): the carrier pays what it costs to buy the same piece of equipment new at the time of the loss. A 5-year-old excavator that was bought for $250K and is now worth $150K used will be replaced with a new equivalent. Premium is higher because the carrier is paying more on a claim.
Actual Cash Value (ACV): the carrier pays what your used equipment is worth today, after depreciation. The 5-year-old $250K excavator might pay out at $150K, leaving you $100K short of the replacement cost. Premium is lower.
RC costs roughly 10-20% more in premium. The math almost always favors RC because depreciation on heavy equipment is slow (yellow iron holds value), and replacement cost on a totaled machine is what gets you back to operating capacity. We default contractor programs to RC unless the contractor explicitly chooses ACV after understanding the trade-off.
Higher deductibles lower the premium. Standard deductible options range from $1,000 to $25,000 per occurrence. On a heavy equipment fleet, choosing $5,000 over $1,000 can save 10-15% on premium. Choosing $10,000 over $5,000 saves another 10-15%.
Pick the deductible that matches your cash position. If a $10,000 hit on a single claim is fine, a $10,000 deductible is correct. If $10,000 would create a problem, the savings are not worth it.
Carriers price your fleet based on your claim history and your operators. A contractor with three theft claims in the last five years is going to pay more than a contractor with zero claims. A contractor whose operators have CDL Class A licenses and 10+ years of experience is going to pay less than a contractor relying on labor-pool operators.
Inland marine is also rated against the work the equipment performs. Demolition contractors pay more than landscape contractors for the same machine because the work is rougher. Underwriters look at your job mix, your typical project size, and your operator turnover when pricing the program.
The coverage rules differ for each.
Owned equipment: covered by your inland marine policy if scheduled (high-value items) or under the blanket limit (smaller items). Premium is based on value.
Leased equipment: usually covered, but the lease agreement controls. Most leases require the lessee (you) to carry physical damage insurance with the lessor named as loss payee. Confirm this before signing the lease, and confirm the lessor is properly added to the policy.
Rented equipment: covered with the right endorsement. Most carriers offer a "rented and leased equipment" extension to the inland marine policy. The extension typically caps coverage at $25,000 to $100,000 per item with a separate aggregate. If you regularly rent equipment over the cap, you need a higher rented equipment limit. Always check your policy before signing a rental agreement - the rental company's damage waiver almost always costs more than adding the coverage to your own policy.
The other rental coverage decision: the rental company will offer their damage waiver at $50-200 per day on top of the rental rate. Walk into a rental yard for a $400/day machine and they will try to add a $100/day waiver. That is $700/week in waiver charges. Adding a $50,000 rental equipment endorsement to your inland marine policy typically costs $300-800 per year and covers unlimited rentals.
The biggest claim denial we see in heavy equipment insurance is not about damage to the equipment itself. It is about liability when the equipment is being driven on a public road.
By default, mobile equipment - excavators, skid steers, front loaders, telehandlers - is treated as "mobile equipment" under your General Liability policy when it is operating at a jobsite. The CGL covers digging, lifting, drilling, paving. That is GL territory.
But the moment that same equipment is driven on a public road in a state with compulsory motor vehicle insurance law, the 2004 ISO change reclassifies it as an "auto." Your General Liability policy drops it. Your Business Auto Policy needs to pick it up - but only if your auto policy has the right symbol.
Most contractors are written on Symbol 7 (specifically described autos) plus Symbol 8 (hired). Mobile equipment that was never scheduled is not covered. There is no symbol broad enough to pick it up automatically. Both policies go silent.
Read the deeper guides on this:
- Commercial Auto Symbols for Contractors: Symbol 1 Guide
- Mobile Equipment vs Auto: When Your Bulldozer Becomes an Auto
- BAP, CGL, and Inland Marine: Which Policy Covers What When Your Equipment Moves
The inland marine policy still pays for physical damage to the equipment regardless of where it is or what it is doing. But the LIABILITY side of the exposure is where the gap lives, and it lives on the auto policy. If your contractor program has heavy equipment that touches public roads, this conversation matters more than any other detail of the program.
General liability, workers comp, commercial auto, equipment - we package the whole program for contractors. Apply in about 10 minutes and we will get to work.
The coverage approach differs slightly for new versus used purchases.
New equipment: insure on a replacement cost basis at full purchase price. Add the lender or lessor as loss payee if financed or leased. The first 12 months on new equipment have the cleanest claim history because the warranty covers most mechanical issues, and the inland marine policy handles the perils outside the warranty (theft, fire, vandalism, accidents).
Used equipment: the appraisal becomes the negotiation. Most carriers will write either RC or ACV on used equipment. Replacement cost on a 5-year-old machine pays the cost of a comparable used replacement, not a new one (some carriers go new, but not all). Get the RC vs ACV decision in writing before binding.
Rebuilt or refurbished equipment: some carriers exclude or charge extra for equipment that has been rebuilt by a non-OEM shop. Disclose any rebuilds during underwriting.
The single biggest reason heavy equipment claims get reduced or denied is incomplete documentation. The equipment was insured. The loss happened. But the contractor cannot prove what they had, when they had it, or what it was worth.
The minimum documentation every contractor should keep, off-site:
Store all of this off-site. Cloud storage, second laptop, sent to your CPA, hardcopy in a safe deposit box. The worst-case scenario is the file living on the laptop in the same truck as the stolen tools.
For every contractor we write, the heavy equipment side of the program follows the same approach:
Physical damage to mobile equipment caused by theft, vandalism, fire, weather, collision, overturn, transit incidents, and most other causes (open-peril policy). The coverage applies wherever the equipment is - jobsite, in transit, at the contractor yard. It does NOT cover liability for damage caused by the equipment to other people or property - that is General Liability or Business Auto.
Typically 1% to 3% of the total insured value per year. A $250,000 excavator runs $2,500 to $7,500. A $1M concrete pump truck runs $10,000 to $30,000. Storage conditions, replacement cost vs ACV, deductible, and loss history move the rate within and beyond that range.
Heavy equipment insurance is a configuration of inland marine. Inland marine is the policy form. Heavy equipment is the schedule of high-value items written on that form. Most contractor programs combine heavy equipment scheduled coverage with blanket inland marine for tools and small equipment in one policy.
Yes, with the right endorsement. The rented/leased equipment extension covers items you rent or lease against the same perils as owned equipment. Endorsement limits typically cap at $25,000 to $100,000 per item - confirm the limit is adequate for your typical rental size before binding.
Scheduled coverage lists each piece of equipment individually with a specific value. Blanket coverage insures a category (like "all hand tools" or "all power tools under $5,000") without listing individual items, up to a category limit. Heavy equipment is almost always scheduled. Smaller equipment is typically blanket.
Yes. Heavy equipment insurance is property coverage that responds to direct physical loss regardless of cause (open-peril policy). Operator error, collision, overturn, and rollover are all covered. The exception is intentional damage by an employee, which is excluded - that exposure goes on a Crime policy with employee dishonesty coverage.
Replacement cost in almost every case. The premium is 10-20% higher, but a covered loss pays the cost of a new equivalent piece, not a depreciated payout. Heavy equipment depreciates slowly, but the gap between RC and ACV on a 5-year-old machine can be $50,000 to $200,000. The math favors RC.
Your heavy equipment is the asset that earns every dollar of revenue your business produces. The right inland marine schedule turns a six-figure equipment loss into a paperwork problem. The wrong one leaves you funding the replacement out of pocket while the job sits idle.
Grit places heavy equipment insurance alongside your full commercial program - one agency, one team, every policy coordinated. Call us directly at (801) 505-5500 or request a quote online.
Related reading: Contractors Equipment / Inland Marine Insurance | Commercial Auto Symbols for Contractors | Mobile Equipment vs Auto | Why Auto Doesn't Cover Tools | BAP, CGL, and Inland Marine