The phone call goes the same way every time. A contractor walks out to his truck on a Monday morning. Window smashed. Lock punched. Tool boxes pried open. Eighteen, twenty, twenty-five thousand dollars in tools and equipment gone overnight.
He calls his insurance agent. The agent submits two claims. The auto carrier pays for the broken window and the punched lock. The auto carrier pays nothing for the tools. Then the contractor finds out the truth nobody mentioned when he bought the policy: the tools were never on the auto policy in the first place.
This is the most common claim denial we see in the contractor space, and it is one hundred percent preventable. If you carry tools or equipment in your vehicle, this article is for you. If you would rather just have us look at your program, call (801) 505-5500. Otherwise, here is exactly what your auto policy does and does not cover, and why most contractors are walking around with a six-figure exposure they never agreed to carry.
Your Business Auto Policy (BAP) covers two things. Liability for damage your driver causes to other people and property, and physical damage to the vehicle itself. That is it. The vehicle. The chassis, the engine, the body, the glass.
What it does not cover is anything inside the vehicle that is not part of the vehicle itself. Tools, equipment, materials, inventory, samples, parts, drones, tablets, cell phones, customer property in transit. None of that is covered by the BAP. Auto insurance was never designed to cover the contents of the vehicle. It was designed to cover the vehicle.
This is true on every standard commercial auto policy in the United States. ISO Business Auto Coverage Form CA 00 01. Travelers. Progressive. Hartford. The Hanover. Carrier name does not matter. The coverage form is the same. Vehicle covered. Contents not covered.
Window smashed at a jobsite. Tools stolen from the bed of a locked truck overnight. Catalytic converter cut off and tools taken with it. Equipment ripped out of a service van during lunch. The auto policy pays the deductible and replaces the window or lock or whatever vehicle damage occurred. The auto policy does not pay for the tools.
Same gap, different location. Equipment unloaded at the jobsite for the day. End of shift, equipment is still on the site, secured but not in the vehicle. Stolen overnight. Auto policy does not cover it because it was not in the vehicle. Commercial property policy does not cover it because the property policy only covers your permanent business location, not a jobsite two miles away.
Both gaps have the same fix. Both have the same cause. Most contractors have never had the conversation.
The National Insurance Crime Bureau (NICB) and the National Equipment Register (NER) track equipment theft data. Their joint reports estimate construction equipment theft losses in the United States run somewhere between $300 million and $1 billion annually. The wide range is because the smaller stuff (hand tools, power tools, small equipment) goes unreported when contractors realize they have no coverage.
The reported numbers are bad enough. According to NER's most recent annual data:
The unreported numbers are worse. When a contractor finds out their auto policy does not cover the $4,000 in cordless tools that got stolen, most of them just eat the loss. They do not report it because there is no insurance claim to file. The actual loss to the contracting industry is multiples of the reported number.
Work trucks are the easiest commercial target on the road. Three reasons:
Resale market for stolen tools is also strong. Pawn shops, online marketplaces, swap meets. Cordless tool batteries especially - high resale value, hard to trace, no serial-number registry that ties them to a specific contractor.
The policy that closes the gap is called Inland Marine in agent vocabulary, or Contractors Equipment Insurance in carrier vocabulary. Same product, two names. It is the only policy that covers your tools and equipment when they are away from your permanent business location.
Inland marine covers:
Premium typically runs 1% to 3% of the total insured value per year. A contractor with $40,000 in tools and equipment might pay $400 to $1,200 annually for inland marine coverage. That is the cost of carrying the policy versus carrying the full risk yourself.
For deeper coverage detail, see our inland marine insurance page.
You will hear three names that sound different but are actually the same policy form configured differently.
| Term | What It Means |
|---|---|
| Inland Marine | The umbrella term for property insurance that covers movable property. The full policy form. |
| Contractors Equipment Insurance | Inland marine specifically configured for contractor tools and equipment. Same product, contractor-named. |
| Equipment Floater | A subset of inland marine that covers heavy equipment specifically (excavators, lifts, etc.). Often scheduled with each item listed. |
| Tools Floater | A subset of inland marine that covers hand tools and small power tools. Usually written on a blanket basis (no item-by-item schedule). |
| Installation Floater | A subset of inland marine that covers materials being installed at a jobsite until the work is complete. |
A typical contractor program combines all of these into one inland marine policy with a tools-and-small-equipment blanket limit and scheduled coverage for big-ticket items. We size the limits based on actual inventory, not whatever round number the carrier suggested at quote time.
Insurance is the second line of defense. The first line is making your equipment harder to steal than the next contractor's. Here is the checklist we walk our contractor clients through:
Most theft claims are denied or reduced because the contractor cannot document what was stolen. "Approximately $15,000 in tools" does not pay a claim. "Milwaukee M18 Fuel impact driver, model 2998-22, serial number AB123456, purchased June 2024 for $419 from Home Depot" pays the claim.
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.
Three questions. If your agent cannot answer them in two minutes, you have an agent problem on top of a coverage problem.
If the answers come back wrong, this is an immediate fix - not a renewal-time fix. Endorsements can be added mid-term. There is no reason to walk around with this gap for another six months waiting for renewal.
No. Commercial auto insurance covers the vehicle - liability and physical damage to the truck or van itself. It does not cover the contents. If tools are stolen from your locked truck, commercial auto will pay for the broken window or lock but will not pay for the tools. You need inland marine insurance or a tools floater to cover the contents.
Inland marine insurance, also called contractors equipment insurance or a tools floater. It is a separate policy that covers tools and equipment when they leave your permanent business location, including when they ride in your vehicles, sit at jobsites, or travel between locations.
Most homeowners policies exclude business property or limit coverage for business property to a small amount (usually $2,500 or less). If you use the tools for business purposes, your homeowners policy is not the right place to insure them. Get a commercial inland marine policy instead.
Premiums typically run 1% to 3% of the total insured value per year. A contractor with $50,000 in tools and equipment might pay $500 to $1,500 annually. Heavy equipment runs at the higher end of the range. Storage conditions, deductible, and replacement cost vs. actual cash value also affect premium.
Deductibles range from $250 to $5,000 depending on the policy. Lower deductibles cost more in premium. We typically recommend $1,000 to $2,500 for most contractor programs - high enough to keep premium reasonable, low enough that an average tool theft claim is still worth filing.
Inland marine generally excludes employee theft. That exposure belongs on a Crime policy with employee dishonesty coverage. Many contractor programs add Crime coverage as a small endorsement onto the package or as a standalone policy. Worth discussing if your operation handles cash, has a high turnover rate, or carries large quantities of high-resale equipment.
The cost of inland marine coverage is small. The cost of going without it is large. We see this denial conversation play out every month, and every time it ends the same way: the contractor was never told, the agent never asked the right questions, and the loss came out of pocket.
If you carry tools in your vehicle, and you do not have a clean answer to "what insurance covers my tools when they leave my shop," that is a 30-minute fix that should not wait until next renewal.
Call us directly: (801) 505-5500
Or request a quote online and we will run a coverage check on your current program.
Related reading: Inland Marine Insurance for Tools and Equipment | Commercial Auto Symbols for Contractors | Mobile Equipment vs Auto: When Mobile Equipment Becomes an Auto | General Liability for Contractors