Ask the expert: Tool insurance for contractors
As a contractor, theft of tools out of your company cars and trucks causes massive delays to projects and can be quite costly if you are not covered. Inland marine coverage, even though it has an odd name, is an additional insurance policy for mobile equipment and tools. Think of the important stuff you take with you from job to job. Anything from excavators to your small tools can be protected with this coverage. I am Dominic Corriveau and this is part four of my interview series breaking down complex insurance topics for non-experts.
For this interview I had an enjoyable conversation with Eloise Patton, commercial lines account manager with Trucordia and perhaps the most experienced insurance professional for contractors in the Pacific Northwest.
Give our discussion a listen, watch the video, or read the full transcript below.
Overview
- What is an inland marine policy? (jump to section)
- What does an inland marine policy cover? (jump to section)
- What about trailers and inland marine policies? (jump to section)
- Can an inland marine policy help protect tool and equipment rentals?(jump to section)
- What other details should contractors know about an inland marine policy?(jump to section)
Music: “Carpe Diem” Kevin MacLeod (incompetech.com)
Licensed under Creative Commons: By Attribution 4.0 License
http://creativecommons.org/licenses/by/4.0/
This transcript was generated using a combination of speech recognition and human transcribers. It has been lightly edited for clarity and general grammar corrections but may still contain errors.
What is an inland marine policy?
Dominic: Hi, Eloise. How are you today?
Eloise: Good, just trying to get caught up from on vacation still.
Dominic: Yeah, no problem. Happy to talk to you today. I’m really excited to talk about Inland Marine, which sounds funny. Tell me your name and job title and then how many years you’ve been with Cross.
Eloise: My name is Eloise Patton. I’m a senior commercial manager. I’ve been with Cross for probably about five years but in the insurance industry for about 40. That makes me sound really old, sorry.
Dominic: No, it’s okay. So I wanted to start with, for contractors, the basics of a business policy, like high level what does that cover? ‘Cause I’m sure there’s a lot of people that think like, well my tools are covered because I have an insurance policy.
Eloise: They do, I’ve had that come up pretty frequently recently which is kind of surprising ’cause they do, you know what? Especially when they have a loss I’ll call and say, oh my tools were stolen. It’s covered under my policy, right? No, not unless you have an Inland Marine policy. That’s covering your tools ’cause it is a separate policy.
Dominic: That’s what I thought. What does the business policy cover? Like basically what is that for?
Eloise: It covers ensuing losses which means that, and I’ll give you an example, if a plumber is in inside of a home and he drops a wrench or something on a sink or a toilet, the sink or the toilet would be covered under the general liability. The general liability does not cover any poor workmanship, that is covered under the bond.
Dominic: As you mentioned tools, if you wanna cover your tools you need to get an Inland Marine policy. Is that a totally separate policy or is that an add-on to your general liability policy?
Eloise: It’s a totally separate policy. Some companies will add it but most of the time it’s a separate policy.
Dominic: Is that hard to get? Is there a lot of qualifications you need to be able to get them?
Eloise: No, it’s easy peasy. What you do is get an amount from the insured how much do you feel your small tools are worth? If you have anything over $2,500 you should really schedule it separately so that you have enough coverage for that plus your tools.
What does an inland marine policy cover?
Dominic: So what does it cover, you said small tools. So we’re talking like tool bags the stuff that you need for your everyday job, right?
Eloise: Yeah and you know small tools, hammers, saws, screwdrivers that sort of thing.
Dominic: And same thing like shovels and wheelbarrows that kind of stuff.
Eloise: Yeah.
Dominic: So what if you have heavier equipment you have like a trencher, or a Bobcat, maybe a riding mower. How does that work?
Eloise: Then you just schedule it separately for the value of it. So it will on the policy it’ll show an amount for all your tools. It’ll show like say 20,000 and then underneath that you schedule the excavator or whatever piece of heavy equipment you have. So you would need to get the year, make model and the value of it. And then that’s a separate limit from the tool coverage.
Dominic: Is that still under the Inland Marine policy or is that on your general liability?
Eloise: It’s still under the Inland Marine.
Dominic: And then when you schedule it separately I’m sure that’s adding on and then how many items that you have in your bucket plus individuals schedules will determine how much your cost is for the policy, right?
Eloise: Correct, yep that’s right.
Dominic: Okay so if I have like, if I’m a landscape maintenance company I have like eight ride-on mowers. I would wanna schedule them individually on my Inland Marine policy.
Eloise: That is correct, yes.
Dominic: What if I have multiple trucks let’s say I get a tool policy, but I have three trucks or I have the Inland Marine policy I have three trucks. Is that one policy gonna cover all those trucks?
Eloise: Yes, the tools are covered wherever they’re at whether they’re at home, in your garage, in your vehicle on the job site anywhere.
Dominic: And I’ve seen a question that people have asked is if my tools get stolen from my shop that’s covered under my regular business policy but it’s just when I’m off my shop property, that’s when the Inland Marine will kick in.
Eloise: No, if your tools are at your shop they’re still gonna be covered under the Inland Marine policy.
What about trailers and inland marine policies?
Dominic: What about trailers? Can you use it like if you have a dump trailer or something like that can you use it Inland Marine for that or should you get something separate?
Eloise: You generally the liability for trailers comes off whichever vehicle you’re trailering it with. So if it should swing over, come loose, whatever hit a vehicle, you’ve got automatic coverage from the vehicle. Now, if you want compound collision on it, then you would need to put it under your business auto policy and just cover it for comprehensive and collision. It’s pretty minimal coverage or premium I’m sorry, premium.
Dominic: I know that a lot of contractors deal with trailer theft. So they have it parked at their shop. Should they get a separate like trailer policy to help reimburse for that?
Eloise: No, that can be added their business auto policy.
Can an inland marine policy help protect tool and equipment rentals?
Dominic: Oh, okay, I got it now. Now for Inland Marine what if I rent a bunch of tools? Let’s say like, I don’t own a trencher. I want an Inland Marine to help with my tools but then I rent a trencher when I need it. Does I provide any extra coverage or options say I wreck it.
Eloise: Yeah you can have an option you can rent it and lease the equipment. And then what the company needs for that is they need to know an approximate amount of how much you would rent or lease in a year. And the premium is based off of that amount.
Dominic: Yeah ’cause there’s some tools say if you need a lift you’re not gonna go buy a lift that you only need for three or four times a year. So it sounds like you can take an estimation on how many times you would use it in a year, then add that on.
Eloise: Right.
Dominic: That’s cool and then you might be able to couple that with the insurance that the rental place offers as well, just in case then you you’re protecting.
Eloise: That’s correct, yep.
What other details should contractors know about an inland marine policy?
Dominic: Is there a waiting period for Inland Marine when you sign up for it?
Eloise: Nope, it’s effective the day you issue it.
Dominic: It sounds like there might be a bucket like you get your policy will cover a certain amount in small tools. So like $20,000 in small tools, is that how it works that goes in like ranges?
Eloise: You can pick any number you want. Yeah, and it is never a replacement policies, actual cash value.
Dominic: Can you just really first define what actual cash value means?
Eloise: Cost new minus depreciation.
Dominic: I like that description, straight to the point like this this is what it is. If someone wants to sign up for this the best way to do that would be to call in?
Eloise: It’s real simple I mean it takes minutes to quote it’s very I mean, I already know what a $20,000 policy is for like Liberty Mutual.
Dominic: And that’s great to know that you don’t it doesn’t have to be on your general liability. So someone could theoretically have a GL policy somewhere else, but then call you about an Inland Marine policy?
Eloise: Right, yep.
Dominic: Any like risks or gotchas or anything that people should know about Inland Marine policy other than its actual cash value?
Eloise: I always tell them to make a list of what they’ve got or take photos because and I ask the question, if somebody came and stole all of your tools would you know what was in there? No, okay then at that time I suggest well maybe you might wanna make just a little list of what you have or take photos of it just so you have some sort of proof. The insurance company doesn’t ask for that in the event of a loss, but for their sake it’s good to have that just so that they know, okay here I had this little screwdriver or I had a hammer or whatever.
Dominic: Yeah I imagine it’s really helpful keeping a list when you have small electronic tools, like you have a lot of DeWalt battery operated tools.
Eloise: Right.
Dominic: Cool, okay I don’t have any other questions. This sounds pretty straightforward. Thank you Eloise for giving me the rundown on Inland Marine.
Eloise: Okay, great.
