Construction equipment represents a major capital investment. Learn how inland marine, equipment floater, and rental equipment coverage protect your mobile assets.
Coverage Guides
Construction Equipment Insurance Guide
Construction equipment represents a major capital investment. Learn how inland marine, equipment floater, and rental equipment coverage protect your mobile assets.
Inland marine insurance is the primary coverage for construction equipment, tools, and materials in transit or at temporary locations. The name dates back to ocean marine coverage origins, but today inland marine covers mobile property that moves from job site to job site. Standard commercial property policies only cover equipment at listed locations, leaving gaps when assets are at job sites, in transit, or stored at temporary locations. Contractors equipment floaters, tools floaters, and installation floaters are the most common inland marine policies for construction companies.
A contractors equipment floater covers owned heavy equipment including excavators, loaders, cranes, bulldozers, and similar machinery. Coverage is typically on a scheduled basis where each piece of equipment is listed with an agreed value, or on a blanket basis covering all equipment up to a total limit. Covered perils include theft, fire, vandalism, overturn, collision, and weather damage. Key policy terms to review include the valuation method (replacement cost versus actual cash value), deductible structure, coverage territory, and whether the policy covers equipment in transit. Breakdown coverage for mechanical and electrical failure can be added by endorsement.
Small tools and portable equipment are frequently stolen from construction sites and vehicles. A tools floater provides blanket coverage for hand tools, power tools, laser levels, testing equipment, and similar portable items. Coverage is typically written with a per-item limit and an aggregate limit. Theft from unlocked vehicles is commonly excluded or limited. GPS tracking and lockable storage solutions can reduce both theft frequency and insurance premiums. Employee-owned tools used on company projects may need separate coverage arrangements. Maintain an updated inventory with photographs and serial numbers for claims documentation.
When renting equipment from dealers, the rental agreement typically requires you to insure the equipment. Equipment rental companies offer their own damage waivers, but these are often expensive and may not provide the same coverage as your inland marine policy. Many contractors equipment policies can be endorsed to cover rented or leased equipment, which is usually more cost-effective than dealer-offered coverage. Review rental agreements carefully to understand your liability for damage, theft, and loss of use charges. Some inland marine policies exclude loss of use charges, which can be substantial on high-value rental equipment.
Standard inland marine policies typically exclude mechanical and electrical breakdown that is not caused by an external event. Equipment breakdown coverage, also called boiler and machinery insurance, fills this gap by covering sudden and accidental breakdown of mechanical and electrical components. This is particularly important for expensive equipment like cranes, generators, and compressors where a mechanical failure can cost tens of thousands of dollars to repair. Coverage can include repair or replacement costs, expediting expenses, and lost income during repair periods. Regular maintenance documentation is important for demonstrating that breakdowns were sudden and accidental rather than resulting from deferred maintenance.
Equipment insurance premiums are based on total insured values, equipment types, deductible levels, and loss history. To manage costs, maintain accurate equipment schedules and remove sold or retired items promptly. Higher deductibles reduce premium for contractors who can absorb smaller losses. Implement theft prevention measures including GPS tracking, locked storage, job site cameras, and ignition disable devices. Preventive maintenance programs reduce breakdown frequency and demonstrate responsible ownership to insurers. Consider actual cash value coverage for older equipment where replacement cost coverage may be excessive. Bundle inland marine with your GL and other coverages for potential package discounts.
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