Tool and equipment insurance is the policy that actually replaces your own tools when they are stolen, lost or damaged. It is a type of inland marine cover, also sold as an equipment floater or contractor's equipment insurance, and it follows your gear wherever it goes: on site, in transit, or stored in the van. Neither your commercial general liability policy nor your commercial auto policy will do this job. The catch that traps most tradespeople is the overnight-in-vehicle exclusion, so read that section carefully before you buy.
Why a floater, and not your other policies
Three policies sit close together, and only one of them covers your tools.
- CGL covers third parties, not you. It pays when your work hurts someone else's person or property. It will never replace a stolen drill (see Commercial General Liability).
- Commercial auto covers the vehicle, not its loose contents. A commercial auto policy covers the van itself, and equipment permanently attached to it (racks, built-in fixtures). Loose tools, portable power tools and toolboxes inside the van are not covered by commercial auto.
- The equipment floater (inland marine) covers your movable gear. This is the right product. It pays for portable tools stolen from a job site, your van or in transit, and for damage from fire, flood and vandalism. Rented or leased equipment can often be added; confirm with your broker.
How the floater works
Brokers often draw a line by value: items under about $2,500 are treated as "tools" and anything above as "equipment," which affects how each is scheduled. You then choose between two valuation bases, and the choice matters enormously:
- Replacement cost: pays for a new equivalent model, no depreciation deducted.
- Actual cash value (ACV): pays what your used, depreciated tool is worth today, which can be a fraction of replacement cost.
Replacement cost costs a little more and is almost always worth it for a working tradesperson. As a cost indication only, basic tool cover can start around $125 a year, varying widely by trade, total tool value, location and claims history. That is a benchmark, not a quote.
Limits and deductibles to check
Two numbers decide whether a claim actually rebuilds your kit:
- Single-item limit. A policy with a $15,000 aggregate but a $2,000 single-item limit will only partly pay out on a $3,000 laser level. Match single-item limits to your most valuable tools.
- Deductible. Tool floater deductibles in Canada commonly fall somewhere in the few-hundred to around $1,000 range, depending on insurer and policy. Treat that as indicative; confirm yours.
You can usually choose blanket coverage (simpler, one pooled limit) or scheduled coverage (each high-value tool listed, often better protection for expensive single items).
The overnight-in-vehicle exclusion (the trap)
This is the exclusion that catches Canadian tradespeople out more than any other. Many policies exclude theft of tools left overnight in an unattended vehicle, or impose strict conditions that are easy to fail in a real theft:
- Tools left in an unlocked vehicle are commonly not covered at all.
- Cover may require the tools to be in a locked, hard-sided, permanently fixed container or van vault, not a soft bag in the cab.
- A working alarm and evidence of forced entry (a broken window or forced lock) may be required; a clean, no-forced-entry theft is likely to be challenged.
- Overnight storage in the vehicle may be excluded or sublimited unless you add a specific rider.
Before you sign, ask the broker in writing: does this policy cover tools in a locked van overnight, and what security must I have for that to hold? More on prevention, the security insurers expect, and what to do after a theft is in Protecting Tools from Theft.
Blanket versus scheduled, and which to choose
A blanket floater gives you a single pooled limit that any covered tool can draw on, which is simple and works well when your kit is lots of moderately priced items. A scheduled floater lists each tool individually, usually with its own value, which is more admin but better protection for a handful of expensive pieces such as a survey-grade laser level, a core drill or a concrete saw. Many tradespeople run a blanket limit for the general kit and schedule the two or three high-value tools separately, so a single big item is never capped by a blanket single-item sublimit. Whichever you pick, keep your inventory current: every new purchase should be added, with its receipt and serial number filed, so the floater actually reflects what you own on the day of a loss.
Where the floater covers you
A properly written equipment floater follows the gear rather than a single location, so it covers tools at the job site, in transit between sites, in temporary storage and in the van, subject to the policy conditions. Watch for two limits buried in the wording: a geographic radius (some policies only cover within a set distance of your home base) and a job-site storage condition (tools in an exterior site box or locked trailer may need that container to meet a security standard). If you travel for work or store tools on site overnight, raise both with your broker before you buy.
Common mistakes
- Assuming CGL or commercial auto covers your tools. Neither does. Only the floater does.
- Buying ACV to save a few dollars. A depreciated payout on a five-year-old kit will not re-equip you.
- Ignoring single-item limits. Your one expensive tool is the one most likely to fall short.
- Skipping the overnight wording. The most common real-world theft is exactly the one the standard policy excludes.
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