Tools and Equipment Insurance for Contractors in Canada

As a contractor, you rely on your tools and equipment to secure clients and complete jobs. Without them, you wouldn’t have a business. So, protecting them with a dedicated tools and equipment insurance policy is essential to ensure the long-term survival of your company. Fortunately, our team at LiabilityCover is well-versed in connecting contractors like you with the best insurers in the country.

In the subsequent sections, you’ll learn more about tools and equipment insurance, how it can help your business, and so much more.


What Is Tools and Equipment Insurance Coverage?

Tools and equipment insurance is considered a form of property coverage that offers financial protection for your transportable equipment and tools used for jobs. The policy gives you the money to repair or replace tools should they be damaged, stolen, vandalized, or lost.

In the eyes of insurers, anything valued over $1,500 is considered equipment, whereas anything valued below $1,500 is a tool.


Tools and Equipment Insurance Real-World Claims Examples

To give you a better understanding of how tools and equipment insurance can keep your business thriving in unfortunate circumstances, consider the real-world examples below:


Example One: Vandalism Claim

You are building an extension on your client’s home. You and your team went away for lunch. During this time, the site was vandalized, and your bulldozer was seriously damaged.

Thankfully, your construction equipment insurance covered the costs involved with repairing the bulldozer, equalling $10,000. Without the cover, you’d be left to pay for the repairs out of pocket, which could put you into debt.


Example Two: Equipment Damage Claim

You are a mechanic. Sam hires you to fix the engine on their car. While you’re working on Sam’s vehicle, you accidentally drop a heavy tool on an air compressor nearby. Unfortunately, the damage is severe enough that it’s unusable.

Luckily, your tools and equipment insurance covers the costs of fixing the air compressor’s engine, equalling $2,400.


Example Three: Tool Theft Claim

You are an electrician. You’re installing wiring into a shopping plaza. You leave the tools in the secured area overnight. However, you quickly realize they have been stolen when you return to work the following day.

You claim on your tools and equipment insurance and are successful, meaning you receive the $1,400 needed to replace your stolen items.


What Does Tools and Equipment Insurance Cover?

Tools and equipment insurance covers the costs of replacing or repairing the tools you use to complete work-related projects. While all policies differ, they usually extend to:

  • tools and equipment left at a client’s location.
  • tools and equipment in transport.
  • leased or rented tools and equipment.
  • owned tools and equipment.

Everything from measurement devices to safety gear to power tools can be protected under tools and equipment insurance coverage.


What Doesn’t Tools and Equipment Insurance Cover?

The coverage provided by tools and equipment insurance does not extend to the following:

  • Tools or equipment that is past its useful lifetime
  • Damage from general wear and tear
  • Damage from non-insured reasons
  • Deliberate damages


How Much Is Tools and Equipment Insurance Coverage?

Generally speaking, contractors in Canada pay at least $400 per year for a standard tools and equipment insurance policy. However, your premium price may change based on a variety of factors, such as:

  • The types of tools and equipment you wish to cover — Power tools, hand tools, assisting tools, measurement devices, safety gear, and heavy construction equipment all carry different risk levels. Naturally, the riskier your items, the more you’ll pay for the coverage.
  • Your operating location — Some areas of Canada are more susceptible to high crime rates and adverse weather conditions. If you work in locations with either of these, you should expect to pay more for insurance. Places most affected by severe weather or high crime in the country are as follows:
    • Alberta
    • Saskatchewan
    • Manitoba
    • South-central British Columbia
    • South-western Ontario
    • Hamilton
    • Regina
    • Brampton
    • Winnipeg
    • North Bay
    • Sault Ste. Marie
    • Sudbury
    • Red Deer
    • Lethbridge
    • Surrey
  • Your insurance claims history — A history of consistent insurance claims indicates a high chance of you making a claim in the future. Therefore, you should anticipate spending more on your tools and equipment coverage than a contractor with a clean claims record.
  • The value of each item — The more valuable your tools and equipment, the more they will cost to insure. Why? Because the insurer must pay out a higher amount if they are lost, stolen, or damaged.


Who Needs Tools and Equipment Insurance?

Tools and equipment insurance is mainly designed to protect the items used by construction contractors and companies that work in a variety of places. However, other professions may benefit from the coverage, including the following:

  • General contractors
  • Roofers
  • Cleaner
  • Arborist
  • Welder
  • Plumbers
  • HVAC technicians
  • Landscapers
  • Electricians
  • Basement contractors
  • Bricklayers
  • Masons
  • Carpenters
  • Drywallers
  • Flooring contractors
  • Painters


Is Tools and Equipment Insurance On Its Own Enough?

Tools and equipment insurance should be part of your comprehensive business insurance plan. It doesn’t cover all eventualities on its own.

Depending on your unique business needs, complete protection may involve a policy package containing the following:


Professional Liability Insurance Coverage

Sometimes called errors and omissions insurance, professional liability insurance protects you from clients who allege financial loss due to your service. Negligence, failure to deliver a service as promised, and misconduct allegations are also covered under this policy.

For the lowest coverage limit (i.e., $100,000), you should anticipate spending around $250 per year. However, as a construction contractor, you might need a higher limit, which increases the price. Other factors that influence the cost include:

  • Your annual and projected revenue
  • Number of employees
  • Years of experience
  • Your services and industry

The policy isn’t necessary for all businesses. But if you offer advice at any stage, you should protect yourself with professional liability insurance coverage.


Commercial General Liability Insurance Coverage

Commercial general liability (typically abbreviated to CGL) insurance is a policy that provides financial protection for third-party claims of bodily injury and property damage caused by your business due to unforeseen circumstances or negligence. If you’re sued, it often pays any compensatory damages and your legal defence costs, whether you win or lose the lawsuit.

We recommend CGL to all companies that deal with third parties, including vendors, suppliers, other businesses, and clients. Thus, most Canadian businesses have some level of commercial general liability insurance coverage.

Just keep in mind that it doesn’t cover:

  • Motor vehicles, including tractors, diggers, bulldozers, etc.
  • Contractual liability
  • Intentional criminal or dishonest acts
  • Patent or copyright infringement
  • Theft of intellectual property
  • Professional services
  • Advice


Builders Risk Insurance Coverage

Builders risk, otherwise known as course of construction, is an insurance type that covers the building and liability for the duration of the project. Normally, the project owner will purchase a builders risk policy as property claims can be costly.

The coverage extends to:

  • The building itself
  • Liability if physical loss or damage occurs from an insured event (usually fires, vandalism, or thefts)
  • On-site construction materials

The policy covers you from the start to the conclusion of the project, ensuring adequate protection at every moment.

As for the cost, it varies dramatically from project to project, depending on:

  • Hard and soft costs
  • Value of the building
  • Previous insurance claims
  • Type of project


Commercial Auto Insurance Coverage

Commercial auto insurance, sometimes known as commercial vehicle insurance, covers vehicles used for work purposes like trucks, cars, trailers, and vans. Any automobile transporting packaged goods, tools, equipment, materials, or people should be covered by a policy.

The coverage inclusions are similar to personal car insurance (accident benefits, DCPD, and more). However, commercial auto policies are customizable based on the number of employees driving the vehicle. Not to mention that they can protect any attached contents, such as tool racks or ladder rigs.


Commercial Property Insurance Coverage

Commercial property insurance coverage financially protects you against the loss of or damage to your business property and its contents due to an insured external disaster (usually fire, vandalism, and theft).

It has a variety of names, including:

  • Business contents insurance
  • Commercial building insurance
  • Commercial rental insurance
  • Business property insurance

The protections are similar to home insurance. But it does not include:

  • Wear and tear of contents due to standard use
  • Cash, precious metals, or securities
  • Contents disappearance without reasonable explanations
  • Buildings left unoccupied or vacant for more than 30 days

Our team can help you decide how much coverage you need after we’ve analyzed your insurance requirements.


Pollution Liability Insurance Coverage

Pollution liability insurance covers third-party property damage, environmental harm, and bodily injury caused by gradual or sudden pollution events that happen on your job site.

The specific coverage points include:

  • Transportation exposures during loading and unloading
  • Emergency response costs
  • Clean-up costs and environmental damage
  • Civil fines
  • Assessments
  • Civil penalties

We recommend this policy to any contractor or business exposed to harmful or pollutive materials. While it’s often required regardless of the pollution exposure level, it’s a critical coverage type for those offering mould remediation, restoration, or asbestos remediation.


Why Choose LiabilityCover?

Our easy-to-understand process makes it easy for contractors across the country to access insurance policies from Canada’s best insurers.

We have years of experience working with businesses like yours, allowing us to connect you with your perfect insurance provider seamlessly. Once you fill in our secure online form, we do all the hard work for you!

Our team ensures you never need to struggle through the insurance process alone.


Frequently Asked Questions


How Can You Get Tools and Equipment Insurance in Canada?

With LiabilityCover, it’s easy to acquire the tools and equipment insurance you need to secure your company’s longevity. Follow the four steps below:

  1. Complete our secure online request form.
  2. Our team analyzes your insurance requirement.
  3. We assign you one of the country’s best insurance providers with years of experience covering contractors like you.
  4. Your designated agent or broker contacts you to guide you through the process.


Is Contractor Tools and Equipment Coverage Worth It?

Absolutely! Your projects rely on specific equipment and tools to get the job done to a high standard. And sadly, there’s always a risk that your items could be harmed, stolen, or lost, regardless of how many precautions you take. Therefore, it’s vital to prevent expensive replacements and project delays with the proper coverage.


What Types of Tools Can You Cover Under Tools and Equipment Insurance?

You can cover a variety of tools with this insurance policy, including but not limited to the following:

  • Power tools — Like sanders, heat guns, power drills, grinders, and power saws.
  • Hand tools — Like wrenches, crowbars, hammers, saws, and screwdrivers.
  • Contractor gear — Like knee pads, goggles, hard hats, belts, uniforms, tool bags, and gloves.
  • Contractor equipment — Like scaffolding, backhoes, generators, compressors, and excavators.
  • Other tools — Like wheelbarrows, ladders, cleaning supplies, and shovels.


Why Should Contractors Take Out a Comprehensive Insurance Plan?

There are many reasons why you should purchase a comprehensive insurance plan, including:

  • Improve your reputation and gain trust — Customers may ask you to submit a certificate of insurance. Thus, purchasing a policy can help you easily gain trust, expand your business, and enhance your reputation.
  • Protect tools, supplies, and heavy equipment — As you now know, including a tools and equipment insurance policy in your comprehensive package protects your necessary items.
  • Protect property and people — You’re trusted with large-scale projects and work to implement risk-mitigating measures. Despite your best efforts, accidents are bound to happen at one point or another. However, insurance can help your business recover from the related expenses.
  • Attract better employees — It’s hard to find talented individuals in your industry. Therefore, insuring your business can enhance your credibility and give your potential employees a peace-of-mind boost.


What’s The Difference Between Tools Insurance and Commercial Property Insurance?

Tools and equipment insurance is intended solely for trade and construction contractors who are looking to cover their tools and equipment used in different areas.

On the other hand, commercial property insurance covers business premises (leased or owned) and their physical contents if damaged or lost due to vandalism, fire, or theft.