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An excavator that is covered by contractors equipment insurance on a construction site


April 15, 2022

5 Liabilities Contractors Equipment Insurance Protects You Against

Whether you rent or own construction equipment, contractors equipment insurance is a must-have to safeguard these valuable physical assets. In insurance terminology, “equipment” refers to big-ticket items valued above $1,000. 

Here are a few examples of insurable equipment used by contractors: 

  • Excavators
  • Road graders
  • Tractors
  • Bulldozers
  • Backhoes
  • Concrete mixers
  • Fork lifts
  • Generators 
  • Compressors

Most of the equipment listed above doesn’t stay in one predictable location. Often, the equipment travels with the contractor. This is why standard commercial property insurance (which can only be set up to cover equipment within insured premises) is not enough.

That’s where contractors equipment insurance comes in. Let’s dive into the fundamentals of this insurance type and the liabilities it covers. 

Different kinds of construction equipment that are covered by contractors equipment insurance

What is Contractors Equipment Insurance? 

Contractors equipment insurance is a specialized type of insurance that covers tools and equipment in the event of damage, vandalism, or theft. 

This type of insurance takes over where other related types of insurance plans end. For example, both builder’s risk insurance and commercial property insurance only cover equipment to an extent. 

Builder’s risk insurance (also known as course of construction insurance) only covers tools valued below $1,000 and excludes more expensive equipment. Meanwhile, commercial property insurance only covers equipment within insured premises. For these reasons, expensive mobile equipment needs the added protection of contractors equipment insurance.

The good news is that builder’s risk insurance, commercial property insurance, and contractors equipment insurance work seamlessly when bundled together. You can also opt to get contractors equipment insurance as a stand-alone policy if this is all your business needs.

Companies that benefit most from contractors equipment insurance include the following:

  • Equipment rental agencies
  • Construction companies
  • Demolition contractors
  • Concrete contractors

To dive deeper into how this type of insurance can benefit your business, let’s explore the liabilities covered by contractors equipment insurance. 

What Liabilities Does Contractors Equipment Insurance Cover? 

Liabilities can be either financial or legal in nature. In both cases, they cause a business to lose money. 

Financial liabilities can be in the form of payables or debt in the face of sudden expenses. Meanwhile, legal liabilities are responsibilities or obligations that will also cost the liable business. 

With contractors equipment insurance, your business is protected from liabilities like the following:

1. Replacement Costs Due to Equipment Theft

Equipment theft in Canada has grown more and more common through the years. In Ontario alone, the provincial police estimated that the total value of stolen equipment is around $15 to $20 million per year.

For this reason, businesses that rely on expensive equipment — whether rented, borrowed, or owned — can benefit from contractors equipment insurance. This type of insurance will prevent massive financial loss or incurred debts tied to replacing stolen equipment. 

2. Repair/Replacement Costs Due to Vandalism

Another peril covered under contractors equipment insurance is equipment vandalism. Though this is less common than equipment theft, it is still included in the broad coverage of this type of insurance. Therefore, contractors equipment insurance will also prevent financial loss and debts tied to repairing or replacing vandalized equipment.

3. Repair/Replacement Costs Due to Damage During Transit or Storage

Whether construction equipment is in storage or in transit, it is covered by contractors equipment insurance at all times. If damage is sustained by the equipment due to fires, floods, criminal activity, and other covered causes, contractors equipment insurance will account for repair or replacement costs — thereby preventing financial liabilities. 

Stored construction equipment covered by contractors equipment insurance

4. Lost Rental Income

If you own an equipment rental business, contractors equipment insurance can be customized to your needs. On top of repair and replacement costs due to equipment theft, vandalism, or damage, there are policies available that will also reimburse your lost rental income.

To learn more, check out our guide: Do You Need Construction Equipment Rental Insurance?

5. Legal Liabilities

Typically, when businesses rent construction equipment, they sign a waiver for loss and damage. Essentially, these waivers (to varying degrees) place responsibility for the equipment in the hands of the renter. In the event of theft or damage, the renter could be partially or wholly responsible for repair or replacement costs. 

Because a waiver is considered a legal document, signing a damage or loss waiver could mean legal obligations (or liability) on the part of the renter if damage or loss of the equipment arises. Contractors equipment insurance gives protection in such cases.

Tailor-Fit Contractors Equipment Insurance That You Can Rely On 

If you want to get started on having comprehensive protection for your heavy equipment, we’re here to help! Contractors Insurance is an award-winning insurance brokerage firm based in Toronto. We specialize in putting together customized insurance for contractors, tradespeople, and professionals such as engineers, accountants, and freight forwarders.

One of our most sought-after insurance policies is contractors equipment insurance. Whether you run a contracting business or an equipment rental business, we can customize this insurance based on your needs and preferences.

On top of setting up customized insurance, our dedicated team will also help you with all your future insurance needs — from policy updates to following up on claims. With us, you’ll get the most hassle-free insurance experience yet. 

Take the first step today! Reach out to our friendly team for questions or request a FREE quote.


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