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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).
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:
Anyone who uses valuable tools or equipment for work should consider tools and equipment insurance to protect their assets against loss, theft, or damage.
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 type | Included? (YES/NO) |
---|---|
Theft and vandalism: Coverage for loss of tools and equipment stolen or vandalized from the job site, a vehicle, or from storage. | YES |
Fire and other natural disasters: Coverage for loss against fires and other weather-related damage like flooding or heatwaves. | YES |
Accidental damage: Coverage for accidental damage like accidental dropping tools or a road accident that damaged equipment. | YES |
Offsite: Coverage for tools and equipment that are not on the job site, but also those in-transit (while driving to and from job sites) or those in storage. | YES |
Wear-and-tear: Loss arising from regular use of tools and equipment, or mechanical breakdowns where equipment is well past its lifespan. | NO |
Intentional damage: As with all types of insurance coverage, losses arising out of intentional damage or negligence are not covered. | NO |
Immobile equipment: Other types of insurance, such as equipment breakdown insurance, exist for stationary or immobile equipment. | NO |
Flood damage: Damage caused by flooding is often not covered. | NO |
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.
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.
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.
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.
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.
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:
Here are some ways to reduce your commercial tools and equipment insurance costs:
Obtain quotes from multiple insurance providers to find the most competitive rate.
Review your inventory and select coverage limits that match the actual quantity and value of your assets.
Choose a basic policy and add only essential coverage, avoiding extras to keep costs low.
As your business grows or changes, review your coverage to avoid paying a chunk on assets you no longer own.
Choose a higher deductible amount to keep your premiums low.
Ask about any available discounts, like having a claim-free history.
Some associations (like the Canadian Federation of Independent Business) offer members discounted rates.
Many insurers offer discounts when you buy several insurance policies instead of one. Ask about bundle deals.
Insurers may offer lower rates if you have certain safety measures in place, like surveillance systems.
Review your inventory regularly to ensure you’re not paying for insurance on old or non-existent equipment.
Don't make small claims that you could cover out-of-pocket. Reserve insurance for big emergencies. A claims-free history will lead to lower premiums over time.
While tools and equipment insurance is not mandatory in Canada, anyone who uses valuable tools or equipment for work should consider this coverage to protect their assets against loss, theft, or damage. It minimizes financial losses, operational downtime, and provides peace of mind, allowing you to focus on your business.
Commercial insurance coverage does not typically cover losses from using tools and equipment for personal purposes. However, some insurance providers might totally exclude losses from personal use, while others may provide limited coverage against them. Check with your insurance provider.
An extended warranty typically covers defects in the tools and equipment for a specified period. However, tools and equipment insurance covers a broad range of incidents, including theft, loss, and damage – things that aren’t covered by warranties – and for as long as your policy is active.
Shaistha Khan
About the Author
Shaistha Khan is a freelance writer in the personal finance space. She is a journalist, writer, and communications specialist with 12 years of experience across the oil and gas, business and professional development, and travel and tourism industries. She has lived in Saudi Arabia for nearly three decades, and reported on some of the first-ever events in the country. She has also reported from the United Arab Emirates, Bahrain, Qatar, India, and Houston, USA. Her work has been published in BBC Travel, USA Today, Al Jazeera, Teen Vogue, Travel + Leisure, Lonely Planet, Vogue Arabia, and several in-flight magazines. She has also worked with tourism boards and hotel chains on sponsored content.
She holds a Master of Business Administration degree (MBA) and a diploma in Public Relations and Reputation Management.