Does general liability insurance cover tool theft?

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Many contractors are confused about the differences between insurance for their tools and equipment and general liability.

This information helps you understand the difference between the two coverage’s. Helping you save money and choose an insurance carrier that provides exactly what you need as a contractor.

  • Reason: To clarify the distinctions between these two types of insurance and explain why general liability does not cover tools and equipment.
  • Purpose: Understanding the specific coverages of each insurance type is crucial for protecting your business and assets.

I. What is General Liability Insurance for Contractors?

  • Definition: General liability insurance provides coverage for third-party claims of bodily injury, property damage, and personal and advertising injury.
  • Key Coverages:
    • Bodily Injury: Covers medical expenses and legal fees if someone is injured on your job site.
    • Property Damage: Covers repair or replacement costs if you damage someone else’s property while working.
    • Personal and Advertising Injury: Covers claims of libel, slander, and copyright infringement.
  • Common Scenarios:
    • A client slips and falls on your worksite.
    • You accidentally damage a client’s property during a project.
  • Limitations:
    • Does not cover damage to your own tools and equipment.
    • Primarily protects against claims from external parties, not internal business assets.

II. What is Contractors Insurance for Tools & Equipment?

  • Definition: Contractors insurance for tools and equipment, also known as inland marine insurance or equipment floater, covers the physical loss or damage to tools and equipment used in your business.
  • Key Coverages:
    • Theft: Covers the replacement cost of tools and equipment if they are stolen.
    • Damage: Covers repair or replacement costs if tools and equipment are damaged (e.g., by fire, vandalism, or accidents).
    • Transit Coverage: Protects tools and equipment while they are being transported between job sites.
  • Common Scenarios:
    • Tools stolen from a job site or vehicle.
    • Equipment damaged in a fire or during transit.
  • Benefits:
    • Provides financial protection for essential business assets.
    • Helps ensure business continuity by enabling quick replacement of vital tools and equipment.

III. Why General Liability Insurance Does Not Cover Tools & Equipment

  • Coverage Scope:
    • General liability insurance is designed to cover third-party claims and does not extend to the contractor’s own property.
  • Risk Nature:
    • Tools and equipment are considered business property and thus require specific coverage under property or inland marine insurance.
  • Insurance Structure:
    • Insurance policies are structured to address different types of risks: liability for third-party claims vs. protection of business assets.

Importance of Having Both Types of Insurance

  • Comprehensive Protection:
    • Combining general liability insurance and tools & equipment insurance provides comprehensive coverage for various risks.
  • Risk Management:
    • Ensures that both external liabilities and internal assets are protected.
  • Financial Stability:
    • Minimizes financial losses from potential claims and damages to essential business property.

Evaluate Your Insurance Needs for Complete Protection

Contractors, it’s crucial to assess your insurance needs and ensure you have both general liability insurance and contractors insurance for tools and equipment. This combination provides comprehensive protection for both external liabilities and internal assets, safeguarding your business from various risks.

We’d love to hear your experiences or answer any questions you have about contractors insurance. Join the discussion with Affordable Contractors Insurance by visiting

Let’s ensure we’re all adequately protected and ready for anything!

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