Contractors invest a great deal of money in having the right tools for the job. For plumbers, that means bringing your tools of the trade with you when you go to a work site.
Unfortunately, the very portability of tools and equipment means that they are prone to loss and theft. Replacement costs can quickly add up, especially for professional-grade tools.
Thatâs why it is so important to have the right insurance coverage.
Protect your business
What is commercial general liability coverage?
Most small businesses understand the need for insurance coverage, and general liability is important coverage to have. General liability is protection from third-party liability claims.
If you accidentally damage a customerâs property while you are on a job, general liability coverage is designed to pay for the repair or replacement.
Although general liability is insurance that your plumbing business should have, it does not protect your tools and equipment from damage, loss, or theft.
What is inland marine coverage?
The first time someone hears âinland marine coverage,â a certain amount of confusion is understandable. âMarineâ suggests the sea, while âinlandâ is the opposite.
Originally, ocean marine coverage protected goods being transported at sea, which was the dominant form of trade at the time. As different forms of transportation became widely available and used, the need arose to protect commercial goods transported overland, by train, and then trucks.
âInlandâ marine coverage is a general term for the type of insurance that protects goods and property while they are transported over land. This distinction is important because while general inland marine coverage protects items only during transport, tools and equipment coverage is continuous, offering protection even when tools are not being used.
What is tools and equipment coverage?
Tools and equipment coverage is insurance that is specifically designed to meet the needs of contractors. It is a form of inland marine coverage that protects property that is frequently moved from one location to another, making it more vulnerable to loss or theft.
Unlike general inland marine coverage, which protects items only while in transit, tools and equipment coverage is ongoing. It protects a plumberâs tools while at a job site, in transit, or at the companyâs main office.
Tools and equipment coverage protects a plumberâs property whether it is being used on-site or stored.
What type of insurance coverages do plumbers need?
Plumbers will need several different types of insurance to be considered adequately covered. Some of these are:
- General liability coverage â Protects a business from legal liability for third-party claims.
- Business ownerâs policy (BOP) â Generally for smaller businesses, this type of policy combines general liability coverage and commercial property insurance coverage.
- Workersâ compensation insurance â Required coverage to protect workers injured while on the job.
- Commercial vehicle insurance â A work vehicle requires commercial insurance coverage. If you use your personal vehicle for work purposes, you will need to look into âhired and non-ownedâ vehicle coverage, as individual auto insurance policies specifically exclude a private vehicle that is used for commercial purposes.
- Tools & Equipment â This coverage protects your business tools and equipment.
- Professional liability coverage â This policy protects your business against claims of poor workmanship or professional negligence.
There may be additional riders or coverage that make sense for your business, such as commercial umbrella insurance.
How does a plumber get tools and equipment coverage?
Tools and equipment coverage will be an added policy to your Business Owners Policy (BOP).
Depending on the insurer and coverage options you select, you may be asked to provide a list of your higher-value tools and equipment, along with an aggregated estimate of your smaller and less expensive tools.
Your policy will have a deductible, an amount for which you are responsible to cover first, before the policy kicks in. For example, if a tool estimated to cost $2,500 is lost or stolen and your deductible is $500, your claim amount will be $2,000 ($2,500 loss minus a $500 deductible).
The policy will also most likely have a coverage limit. This is a ceiling for claims, and it may have limits listed for a year, or per item, or per event. Read your policy closely, as this is important to understand. Very expensive equipment that exceeds your policyâs per-item limit may need to be separately insured.
A tools and equipment policy may allow you to select whether you want coverage at a cash-value or replacement cost basis. A cash value policy will likely be less expensive than a replacement cost policy, but think carefully about the ramifications of this before choosing.
If an expensive piece of equipment is damaged or stolen, a cash value policy will pay the claim at the itemâs depreciated value, while a replacement cost policy will pay the claim at an amount allowing you to purchase a replacement at current cost.
How much does tools and equipment coverage cost?
Like most forms of business insurance, there are many variables that are taken into consideration when estimating a premium for tools and equipment coverage. Some of the factors taken into consideration are:
- The size of your business and number of employees
- Where your plumbing business is located
- How long you have been in business
- Prior claims history
- Annual revenue
- Services offered by your business/work type
- Whether you primarily work with residential or commercial customers
- Amount/value of your plumbing equipment
- The coverage limits and deductibles you select can also have an impact on your premium cost
If you have more questions about tools and equipment coverage for your plumbing business, or are interested in a quote, contact the experts at Rate Insurance. With access to a range of commercial insurers, they can help you find the right coverage to protect the investment youâve made in your plumbing tools and equipment.
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Disclaimer:
All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. Rate Insurance does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Rate Insurance. Rate Insurance, its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action.
