What is contractor equipment insurance?

As a contractor, your equipment is one of your most valuable assets—it’s what keeps your projects moving. But did you know that not all of it is automatically covered under a standard commercial property insurance policy when you're transporting it between job sites? That catches a lot of contractors off guard. Fortunately, that's where contractor equipment insurance can step in to help. This type of contractor's business insurance is there to help protect your equipment from common risks like damage, theft, and vandalism.

Contractor equipment insurance explained

When you're heading to a construction site, your tools and equipment come along for the ride—they’re essential to getting the job done. However, one big risk contractors face is theft or vandalism at the job site, which can put a serious dent in your work and your wallet.

In fact, a report from the National Equipment Register (NER) shows that construction site theft in Canada is a serious problem, racking up losses of up to $1 billion every year. That’s a huge hit to contractors and builders trying to keep their projects on track.

If you have commercial insurance, your equipment (up to a specific value) is usually protected as long as it stays in a fixed location. But mobile machinery or equipment that travels with a contractor will not be covered, such as:

• Bulldozers, backhoes, tractors, excavators, loaders, forklifts, concrete mixers, and more
• Hand tools, power tools, and other spare parts
• Generators, compressors, or cables
• Derricks and draglines
• Safety gear
• Measuring devices

That’s where contractor equipment insurance (also known as equipment floater insurance) comes in. This type of property insurance helps cover your tools and equipment if they’re lost, stolen, or damaged while being moved from one place to another.

What does contractor equipment insurance cover?

Contractor equipment insurance is designed to have your back if your equipment gets damaged, lost, or stolen—and it’s more flexible than you might think. You can tailor your policy to cover the full value of your tools and equipment, and if you want extra protection, you can even add coverage for things like your employees’ work clothing and smaller tools. With the right policy, your equipment can be covered for:

• Theft and vandalism
• Fire, flood, or other weather-related damage
• Lost or damaged equipment while in transit
• Direct physical damage

Many contractor equipment policies are written on an "all-risk" basis, meaning they cover just about everything—unless a specific exclusion is listed in the policy. That means protection from fire, floods, theft, vandalism, and more. Plus, your coverage follows your tools and equipment wherever you take them, whether they’re on-site or in transit.

Coverage can be customized to fit your business, industry, and the specific equipment you rely on. Whether it’s mobile or stationary machinery, tools you own, or even borrowed or rented equipment, the right policy gives you peace of mind—so you can focus on your work, not the "what ifs."

Scheduled and blanket coverage

Contractor equipment insurance typically offers scheduled coverage, blanket coverage, or a mix of both. Before choosing a policy, here’s what you need to know about these options:

Scheduled coverage

This applies only to specific items listed in your policy. Your insurer will usually keep a detailed list on file, and in some cases, you can add new equipment after the policy starts or as you obtain new tools or equipment.

Blanket coverage

Instead of listing each item individually, this covers all equipment that fits the agreed-upon definition of “covered property.” No schedule is needed.

Most contractors use a combination of both to make sure everything is fully protected. When setting up your policy, provide your broker with a list of tools and equipment you want covered—including their make, model, serial number, and estimated value—so there’s no confusion if you ever need to file a claim.

Replacement cost vs. actual cash value coverage

Contractor equipment insurance can also be set up in one of two ways: replacement cost or actual cash value (ACV). Here’s what that means for you:

Replacement cost coverage

If your equipment is damaged, you’ll be reimbursed for the cost to repair or replace it with something of similar age, condition, and quality.

Actual cash value (ACV) coverage

You’ll be reimbursed for the current value of your equipment at the time of the loss, minus depreciation, which means older equipment will have a lower payout.

Since equipment loses value quickly, it’s important to check your policy and know how your coverage is set up. Many policies only offer replacement cost coverage for equipment that’s five years old or newer, so reviewing your policy each year helps ensure your older gear doesn’t automatically switch to ACV coverage without you realizing it.

How much does contractor equipment insurance cost?

Every business is different, and so are the risks that come with it, which means the cost of contractor equipment insurance coverage isn’t one-size-fits-all. Several factors can affect how much you’ll pay for coverage, including:

• Type of equipment—specialized or high-risk equipment may cost more to insure.
• Value of equipment—the more expensive your tools and machinery, the higher the coverage cost.
• Location of equipment—where your equipment is stored and used can impact your premium, especially if theft or damage risks are higher in certain areas.

For an estimate of how much your contractor equipment coverage will cost, it's best to shop around and compare quotes from multiple insurance companies, or you can work with an insurance broker like BrokerLink who can do the insurance shopping for you!

What is not covered under contractor equipment insurance?

While contractor equipment insurance covers a lot, there are a few things it doesn’t protect. Here are some key exclusions to keep in mind:

• Outdated or worn-out tools and equipment.
• Normal wear and tear.
• Intentional damage or uninsured losses.
• Electrical or mechanical malfunctions—if your equipment breaks down due to a power surge, electrical short, or mechanical failure, you’d need Equipment Breakdown Insurance instead.
• Building materials—if you need coverage for materials in transit, storage, or at the job site before installation, installation floater insurance is the way to go.

Examples of construction equipment thefts in Canada

Construction equipment theft is a growing problem, and the numbers don’t lie. Canada has seen some significant construction equipment thefts in recent years. Here are just a few recent examples:

• April 2024 – A heavy machine worth $235,000 was stolen in the Ottawa, Ontario, area.
• June 2024 – Four people in Camrose, Alberta, were charged in connection with $3.1 million in stolen equipment and machinery.
• August 2024 – Three men were charged after swiping over $1 million worth of construction equipment in the Toronto, Ontario, area.
• February 2025 – Two men were charged by York Regional Police in Ontario for stealing $100,000+ in tools and equipment across 15 different incidents.

These cases are just the tip of the iceberg, proving that theft is a real and costly threat for contractors everywhere. In fact, according to the 2024 Cargo and Heavy Equipment Theft Trend Report from Équité Association, over $124.6 million in heavy equipment was stolen in Canada between 2019 and 2023, with only an average recovery rate of 23.92%. The worst places for these thefts were Edmonton, AB, Calgary, AB, and Toronto, ON.

Learn more with BrokerLink

One of the best ways to protect your contracting business from unexpected losses is with contractor equipment insurance. This coverage can help protect your tools and equipment from risks like theft, vandalism, fire, water damage, and more. For a free contractor equipment insurance quote, reach out to BrokerLink today. We can also help you with other types of business insurance, such as general contractor insurance or builder's risk insurance.

You can reach us by phone, by email, or in person at any one of our locations throughout Canada. No matter how you choose to get in touch, a BrokerLink insurance advisor will be happy to assist you. We also encourage you to take advantage of our free online quote tool that can provide you with a competitive quote in minutes.

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