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Contractor’s Tools and Equipment Insurance
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How much does business tools and equipment insurance cost?

The average premium for contractor's tools and equipment insurance is $14 per month. Your coverage limits and property value affect the exact cost of this policy, among other factors.

What do small businesses pay for contractor’s tools and equipment insurance?

Regardless of insurance policy limits, the average cost of contractor's tools and equipment insurance for a small business is $14 per month, or $170 annually.

These estimates were derived from an analysis of the median cost of thousands of insurance policies purchased by TechInsurance's small business customers from leading business insurance companies. The median cost offers a more accurate estimate of what your business is likely to pay than the average cost of business insurance because it excludes outlier high and low premiums.

Factors that impact the cost of business tools and equipment insurance

Several factors, such as your policy limits and coverage options, influence the cost of your contractor's tools and equipment insurance.

Let's take a closer look at how these factors may affect your policy:

How do policy limits influence costs?

A contractor's tools and equipment insurance policy covers the repair or replacement cost of business property that is less than five years old and valued at less than $10,000. Examples of these types of equipment include hand tools, power tools, and small saws. This coverage is designed to protect such items while they are in transit, at a job site, or stored off site.

The cost of your contractor's tools and equipment policy typically depends on the value of your business property. To avoid financial loss, you should choose a coverage limit that matches the value of your items.

If you have a piece of equipment that is worth more than $10,000 (e.g., bulldozers, excavators, backhoes, etc.), you'll need inland marine insurance instead to protect these more expensive items.

How does your property valuation method determine costs?

When purchasing your contractor's tools and equipment policy, you'll have the option to cover your property for either its replacement value or actual cash value.

Replacement value coverage is more expensive because it reimburses you for the purchase of a brand new replacement item. To save money, you should choose the actual cash value option, which instead pays out the item's depreciated value.

How does coverage type affect costs?

A contractor's equipment policy that covers open perils is more expensive than a policy that covers named perils.

Open perils coverage protects your business property against all losses, except those specifically excluded in the policy. On the other hand, named perils only covers losses listed in the policy.

Typically, contractor’s equipment coverage protects your tools and gear against fires, vandalism, theft, and hail damage. Exclusions include equipment breakdown and general wear and tear.

How does the security of your tools impact costs?

An easy way to lower your contractor's tools and equipment premium is to keep your business property safe.

When underwriting your policy, insurance companies will often consider how secure your property is. For instance, equipment that is stored in a locked office with a burglar alarm will cost less to insure than expensive construction tools that remain out in the open at a job site with little-to-no safety measures.

In addition to security measures, insurance providers will also take in consideration how frequently your items are in transit.

How do your industry risks determine costs?

Insurance companies will take into account your industry when determining the premium of your contractor's tools insurance and other equipment policies. In general, small businesses in professions with higher risks and increased chances of filing property claims will likely have to pay a higher premium.

For instance, cleaning businesses spend an average of $38 per month for a contractor's tools and equipment policy, as they may face a greater risk of stolen business equipment or property damage at a client's premises. On the other hand, general contractors and construction companies pay only $14 a month for this coverage.

See the graph below for more insight on how your type of business can impact the cost of your contractor's tools and equipment insurance premium.

Chart: Monthly cost of contractor's tools and equipment insurance by industry

How can you find affordable business tools and equipment insurance?

There are several things you can do to keep your contractor's tools and equipment insurance costs low.

Some strategies include:

Bundle policies

Small low-risk businesses may be eligible for a business owner’s policy (BOP). A BOP bundles general liability coverage with commercial property insurance and costs less than purchasing the policies separately.

Pay your entire premium upfront

You can choose to pay your insurance premiums once a month or once a year. While making a smaller payment each month requires less money up front, it may cost more in the long run since insurers often offer discounts to businesses that pay an annual premium.

Choose a higher deductible

Choosing a higher deductible is an easy way to save on your premium, but make sure to choose a deductible you can still afford. If you can’t pay your deductible, you won't be able to collect on a claim.

Manage your risks

Companies with no previous claims on their insurance can expect to pay less for business insurance. Business owners can help keep their claims history clean with a risk management plan.

This could include:

  • Installation of fire alarms and fire suppression systems
  • Installation of security systems, especially in high risk locations
  • Employee training on fire extinguishers and similar equipment
  • Company protocol that secures valuable equipment
Find free contractor's tools and equipment insurance quotes

How do you buy business tools and equipment insurance with TechInsurance?

TechInsurance is a trusted insurance expert for small businesses, including startups and independent contractors, with extensive knowledge of the IT sector. We help small business owners compare quotes from top-rated insurance carriers, buy policies based on their business needs, and manage coverage online.

By completing TechInsurance's easy online application today, you can get free quotes for contractor's tools and equipment insurance and any additional coverage. Our insurance agents are available to help answer any questions you may have on the different types of coverages.

Once you find the right policies for your small business, you can begin your insurance coverage in less than 24 hours and get a certificate of insurance for your small business.

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Learn more about business insurance costs

Insurance premiums vary based on the types of policies a business buys. View our small business insurance cost overview or find out the average costs for other common types of business insurance policies.