Inland Marine Insurance for Tools and Equipment: A Plain-English Guide
Inland marine insurance covers business property that moves, or that sits somewhere other than your business address. That includes tools in a truck, equipment on a job site, materials waiting to be installed, and goods in transit. If your tools and equipment spend their working lives away from your shop, a commercial property policy alone will probably leave most of their value uninsured. Inland marine is the coverage built for property on the move.
The name confuses people. It has nothing to do with boats. The marine insurance market historically covered cargo, and over time that coverage expanded to property moving over land. California's Insurance Code still reflects that history: §103 defines marine insurance to include property in transit "on land or in the air" and "all personal property floater risks," and it expressly mentions inland marine insurance.
For most small businesses, the practical question is simpler: what happens if my equipment is stolen from a job site or damaged on the road? This guide explains why your commercial property insurance usually doesn't answer that, and which inland marine coverages do.
Why commercial property barely covers property away from your premises
A commercial property policy is written around a location, the address on your declarations. The most widely used standard form, ISO's Building and Personal Property Coverage Form (CP 00 10), shows how tightly that location is drawn.
What the standard form says | What it means for tools and equipment |
Your business personal property is covered when it's in or on the described building, or in the open (or in a vehicle) within 100 feet of the building or premises. | Your shop inventory is covered. Your compressor at a job site across town is not covered under this part. |
"Property Off-premises" extension: property temporarily at a location you don't own, lease or operate, in leased storage, or at a fair or trade show, is covered up to $10,000. | One mid-sized piece of equipment can use up the entire extension. |
That extension does not apply to property in or on a vehicle. | Tools stolen from your work truck generally aren't covered by the off-premises extension. |
Coverage extensions apply only if the declarations show 80% or higher coinsurance (or value reporting). | Some policies don't have the extension at all. |
Vehicles and self-propelled machines that are licensed for public roads, or operated principally away from the described premises, are listed as Property Not Covered (with limited exceptions). | Skid steers, mini-excavators and similar machines that work in the field are typically outside the property form. |
A business owner's policy (BOP) works much the same way. BOPs typically include small off-premises and transit sublimits, which you'll find on your declarations or in the form. Those sublimits suit a laptop at a client's office or a few boxes in the back of a car. They aren't designed for a contractor's tool inventory. For the full picture of the property form, see what commercial property insurance covers and what it doesn't.
The takeaway: commercial property is designed for the building and what stays in it, and anything that travels needs its own coverage.
The main types of inland marine coverage
Inland marine is a family of coverages, not one policy. Most carriers write their own forms, so the descriptions below are typical. Your coverage is whatever your form says.
Contractor's equipment floater
This is the coverage most people mean when they ask for "tool insurance." A floater "floats" with the property, covering it wherever it goes within the policy territory: in the shop, on the truck, at the job site.
It typically covers:
Owned tools and equipment: hand and power tools, generators, compressors, welders, ladders, scaffolding, surveying gear, and mobile machinery such as skid steers, backhoes and trenchers
Leased or rented equipment, often as an option or a sublimit. Rental agreements usually make you responsible for the equipment, so this matters.
Employees' tools, as an option on many forms
Rental reimbursement, sometimes, to pay for a replacement rental while your covered equipment is down after a covered loss
Coverage is usually written on a broad basis, with exclusions that commonly include wear and tear, gradual deterioration, mechanical or electrical breakdown, and loss discovered only on taking inventory. Some forms add conditions for theft from unattended vehicles (for example, the vehicle must be locked and there must be signs of forced entry) or exclude overloading equipment beyond its rated capacity. Read those conditions closely, because they decide most theft claims.
If you're a contractor, this coverage belongs alongside your liability and workers' comp. See business insurance for California contractors and our contractors insurance page.
Installation floater
An installation floater covers materials and equipment you're responsible for installing, such as HVAC units, cabinets, solar panels, windows, plumbing fixtures or electrical gear, from the time they're in your care until the job is completed or accepted. It typically covers the property:
At your shop or a temporary storage location
In transit to the site
On the job site before and during installation
Coverage generally ends when your interest in the property ends. That's usually when the work is accepted by the owner, though the trigger depends on the form. If you've ever had a pallet of fixtures stolen from an open site the night before installation, you know why this exists.
Installation floater vs builder's risk: builder's risk usually covers a building under construction as a whole, and the owner or general contractor typically buys it. An installation floater covers your materials and equipment on a job that may be one small part of a larger project. Check your contract, because it may say who must insure what.
Goods in transit (transit or motor truck cargo coverage)
If your business moves its own goods, transit coverage protects that property while it's on the road. That includes a distributor delivering on its own trucks, a caterer moving equipment to events, or a grower hauling product. Coverage is typically written for your own vehicles, shipments by common carrier, or both.
Why bother insuring goods shipped by a carrier? Because the carrier's liability may be limited. Federal law allows interstate carriers to set rates under which their liability is limited to a value declared by the shipper or agreed in writing, if that value is reasonable under the circumstances (49 U.S.C. §14706(c)(1)(A)). If you shipped at a released rate, the carrier's payment may be far below what the goods were worth.
Note the difference between two coverages with similar names:
Owner's transit coverage protects your
Motor truck cargo liability protects a for-hire trucker against liability for customers' freight. If you haul for others, see trucking insurance.
Other inland marine coverages worth knowing
Inland marine also covers a range of specialized property: signs, valuable papers and records, accounts receivable, computer and electronic equipment (sometimes written as an inland marine form), property of customers in your care (bailee's customers coverage, used by dry cleaners and repair shops), and agricultural equipment. Farm machinery is its own topic; see farm equipment insurance.
Are your tools and equipment insured once they leave the shop? TSM is an independent agency — we compare carriers for you. Call (209) 524-6366 (Modesto) or (530) 221-3031 (Redding).
Scheduled vs blanket coverage
How you list equipment on the policy matters as much as which policy you buy.
| Scheduled | Blanket |
How it works | Each item is listed individually with a description, serial or VIN number, and a value. | One limit covers a category, such as "all unscheduled tools and equipment," without listing every item. |
Best for | Higher-value items: machinery, trailers, large generators, laser levels, surveying equipment | Many low-value items: hand tools, power tools, cords, ladders |
Typical catch | If you buy a new item and don't add it, it may only be covered under a newly acquired property provision for a limited time, or not at all. | Most blanket coverage has a per-item maximum. A $9,000 item under a blanket with a $2,500 per-item limit is underinsured. |
Claim experience | Usually smoother, because the item and value were agreed up front | You must prove ownership and value at claim time (receipts, photos, serial numbers) |
Most businesses use both: schedule anything above the per-item maximum and use blanket coverage for everything else.
Valuation: what the policy pays
Check whether your equipment is valued at:
Actual cash value (ACV): replacement cost minus depreciation. Five-year-old equipment pays out well below the price of a new one.
Replacement cost: the cost of a new, comparable item. It's often available for newer equipment, sometimes with age limits.
Agreed or stated value: a value set for each scheduled item. Confirm how the form actually settles a loss, because "stated amount" doesn't always mean the carrier pays that amount.
Some inland marine forms also include a coinsurance clause, which reduces your claim payment if your total limit is too low compared with what the equipment is actually worth. Keep your equipment values current.
Who needs inland marine coverage
If any of these describe your business, ask about it:
Contractors and trades: general contractors, electricians, plumbers, HVAC, roofers, painters, framers and landscapers
Agricultural operations and ag service businesses: equipment in fields, on trailers and in shared yards
Mobile service businesses: mobile mechanics, pool service, pest control, cleaning companies, photographers and AV crews
Healthcare and technical professionals who carry diagnostic or specialty equipment between locations
Event, catering and rental businesses with equipment that is always in transit
Distributors and manufacturers that deliver their own product
Home-based businesses whose tools leave the house. A homeowners policy often limits business property, so see home-based business insurance.
Building an equipment schedule that holds up at claim time
Most equipment claims go smoothly or badly based on the paperwork you have before the loss. Keep a simple spreadsheet:
Item, make, model, serial number or VIN
Purchase date and price, plus a link to the receipt
Current replacement cost (update annually)
Photos, including the serial plate
Where it's usually kept: shop, truck number, job site
Owned, leased or rented, and the rental company's contract terms if rented
Review the list at renewal against your schedule and blanket limits. Our annual insurance review checklist has a section for this.
If equipment is stolen: report it to the police right away and get a report number. Notify your agent the same day, and send the serial numbers, photos and purchase records. Theft claims without serial numbers are hard to prove and hard to recover. For the full claim process, see filing a business insurance claim.
What drives the price
We don't publish premium averages, because they vary too much by carrier and risk. The main factors are:
Total value of scheduled and blanket equipment
Type of equipment (theft-attractive items and mobile machinery cost more to insure)
Where it's stored overnight: a locked building, a fenced yard, an open job site or a truck
Theft-prevention measures such as GPS tracking, locks and lighting
Deductible
Valuation basis (replacement cost usually costs more than ACV)
Your loss history
FAQs
What is inland marine insurance?
Inland marine insurance covers business property that moves or is kept away from your main location. Examples are tools and equipment, materials being installed, goods in transit, and certain specialized property. It fills the gap left by commercial property insurance, which is built around a fixed address.
Does commercial property insurance cover my tools at a job site?
Usually only a little, if at all. The standard commercial property form covers business personal property at or within 100 feet of your described premises. Its off-premises extension is limited to $10,000, and it doesn't apply to property in or on a vehicle. Most contractors need an equipment floater.
What's the difference between a contractor's equipment floater and an installation floater?
A contractor's equipment floater covers the tools and machinery you use to do the work, wherever they are. An installation floater covers the materials and equipment you're installing into a customer's project, until the job is completed or accepted.
Should I schedule my equipment or use blanket coverage?
Usually both. Schedule high-value items individually with serial numbers and values. Use blanket coverage for the many smaller tools, and make sure no single item exceeds the blanket's per-item limit.
Are my employees' personal tools covered?
Not automatically. Many contractor's equipment forms offer an option for employees' tools, usually with its own limit. If your employees bring their own tools to work, ask for it.
Does inland marine cover tools stolen from my truck?
It can. That's one of the main reasons to buy it. Many forms have conditions for theft from vehicles, such as the vehicle being locked with visible signs of forced entry. Read that section of your form before you rely on it.
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