Get your best commercial tools and equipment insurance quote for free

What is commercial tools and equipment insurance?

Commercial tools and equipment insurance is a type of insurance coverage that protects businesses against loss, theft, or damage to their tools and equipment. It also helps businesses minimize operational downtime.

This insurance policy is widely available in Canada and typically used by businesses in construction, landscaping, and the trades, where expensive tools and equipment are essential for day-to-day operations. It covers damage to tools and equipment in a range of contexts: while they are being used on a job site, transported, or stored in a facility. Tools and equipment insurance is useful for tools that are portable, are frequently transported to different job sites, and are more vulnerable to theft (than, say, stationary equipment).

Who needs tools and equipment insurance?

This coverage is essential for businesses and companies who rely on specialized tools and equipment for their operations and need to bring them to different job sites. Insurance companies classify items costing less than $1,500 as tools, and those over $1,500 are considered equipment.

Here are some examples of professionals or businesses where this insurance coverage is beneficial:

• Tradespeople like carpenters, welders, or HVAC technicians
• Contractors for construction, electrical, plumbing, tiling, painting, and roofing services
• Landscapers and gardeners
• Maintenance and repair professionals
• Photographers, videographers, and media persons with expensive equipment
• Mobile businesses like cleaning services or food businesses
• Auto body shops

Anyone who uses valuable tools or equipment for work should consider tools and equipment insurance to protect their assets against loss, theft, or damage.

What’s covered and not covered under tools and equipment insurance

Tools and equipment insurance covers repair or replacement costs for loss, theft, or damage. Here’s what is typically included in a standard tools and equipment insurance policy, as well as what is excluded.

Coverage specifics can vary by policy, so it’s important to thoroughly review your policy’s terms and conditions to fully understand what is and isn’t covered.

Types of insurance claims that are common to commercial tools and equipment insurance

The most common claims relate to theft, damage, vandalism, and loss. Here are some scenarios where a policyholder could file a claim – and get compensated.

Stolen power tools are swiftly replaced

A contractor’s power tools were stolen from the locked shed at a job site. Thieves made off with a cordless belt sander ($300), a pair of cordless drills ($200 each), and a circular saw ($600).

Without tools and equipment insurance, the contractor would have spent $1,300 of their own money to replace the tools. But since they had coverage, their commercial insurance provider will cover the replacement cost of the stolen tools, allowing the contractor to quickly get back to work without financial strain.

Freelance videographer’s equipment protected by insurance

A freelance videographer’s 4K camera (valued at approximately $3,000) is damaged in a road accident on the way to a corporate event they were hired to shoot.

Thankfully, the videographer has tools and equipment insurance. Their camera is considered equipment due to its replacement value. The policy will cover the cost to replace the equipment as it was damaged while in transit.

Policy covers laptop damaged by power surge

An electrician brings their laptop (valued at $3,500) to a work site. It’s running low on power, so they plug it into a portable generator. A power surge destroys the laptop’s internal circuitry. Their policy will cover the cost to replace the damaged laptop.

How much does commercial tools and equipment insurance cost? 

The cost of commercial tools and equipment insurance in Canada varies based on several factors, including the value of the tools and equipment and the type of business you run:

• Cost value: The more expensive your tools and equipment are, the higher the premium. Insurance coverage for high-end or specialized equipment tends to be more because of the increased risk and cost to repair or replace parts.
• Type of business: Industries such as construction or trades that transport and use tools in high-risk environments typically pay higher premiums. This is due to the increased likelihood of accidents, damage, or theft associated with a high-risk environment. Thus, insurers charge more to account for the higher probability of claims.
• Size of your business: Large businesses usually mean greater operational scope and an increased number and value of insured tools. Insurers consider this as more exposure to risk and higher potential for claims.
• Location: Operating in areas where there is a high incidence of theft, vandalism, or natural disasters increases insurance rates.
• Claims history: If your business has a history of frequent insurance claims, insurers may charge higher premiums or limit coverage options. A history of claims is also used by insurance companies to predict the likelihood of future claims.
• Coverage requirements: Endorsements in your standard policy, like coverage for specialized tools or other types of business risks will have higher premiums.