Contractors carry the tools that run their business in pickups, on trailers, and across dozens of jobsites. A welding rig worth $90,000. A tile saw and crew's toolboxes on a flatbed trailer. A laser level and layout tools for an electrician's van. A skid steer parked on a jobsite overnight. None of this is covered by your general liability policy.
Inland marine insurance — specifically the contractor's equipment form — is what covers property you own, rent, or are responsible for as it moves between locations: your shop, your truck, the jobsite, and everywhere in between. It's a coverage line that too many small contractors skip until they have their first theft or equipment loss.
This guide explains how inland marine and contractor's equipment coverage works, how to structure it correctly, and what it costs for Texas contractors at different size and trade levels.
What Inland Marine Is (and Why the Name Makes No Sense)
"Inland marine" is an insurance category that historically covered cargo on inland waterways and later evolved to cover any property that moves between locations — as opposed to property that stays in one place (which is covered by commercial property). The name is vestigial, but the coverage is practical: it protects portable property that travels with you.
For contractors, inland marine typically comes in two forms:
- Contractor's equipment floater — covers tools, machinery, and equipment owned by you or in your care
- Installation floater — covers materials and equipment from the time you take possession until they're installed and accepted by the owner
This guide focuses primarily on the contractor's equipment floater, which is the coverage most Texas tradespeople are missing. Installation floaters overlap with builder's risk and are covered in our guide to builder's risk insurance in Texas.
What Contractor's Equipment Insurance Covers
A contractor's equipment policy covers direct physical loss to covered equipment from most causes — fire, theft, vandalism, collision, falling objects, flood (in most forms), and accidental damage. Coverage attaches wherever the equipment is located: on your jobsite, loaded on a trailer, stored in your yard, or in transit.
What's typically covered
- Owned tools and equipment (power tools, hand tools, measuring instruments)
- Heavy equipment you own (excavators, skid steers, lifts, compactors)
- Trailers (subject to whether they have their own auto policy)
- Rented or leased equipment in your care (requires a specific endorsement — see below)
- Equipment of others in your care (with appropriate endorsement)
- Leasehold improvements and temporary structures in some forms
What's typically excluded
- Mechanical breakdown, wear and tear, gradual deterioration
- Employee dishonesty (requires a crime policy)
- Property while being worked on (you're not covered while actively using the item to do work)
- Motor vehicles registered or designed for highway use (these go on commercial auto)
- Electronic data
- Accounts receivable, money, securities
Scheduled vs. Blanket Coverage
Contractor's equipment policies can be written two ways, and the difference matters at claim time.
Scheduled coverage
Each piece of equipment is listed on the policy with its own value. The policy pays based on that scheduled value (or actual cash value or replacement cost, depending on how the item is listed). Scheduled coverage is appropriate for high-value individual items — excavators, cranes, specialty equipment, mobile welding rigs — where you want certainty about what's covered at what amount.
The downside: if you buy new equipment and forget to add it to the schedule, it's not covered. Scheduled policies require maintenance. Any significant purchase should trigger a call to your broker to add the item before it goes to the jobsite.
Blanket coverage
A blanket limit covers all your equipment up to a single aggregate amount. You don't list individual items — you just carry a limit (say, $75,000 or $150,000) that applies to any loss. This is simpler to maintain and ensures new equipment is covered automatically up to the blanket limit.
The limitation: if any one item is worth more than the blanket limit, you're underinsured on that item. And blanket policies often use actual cash value, not replacement cost, meaning a three-year-old generator that cost $4,000 new might settle for $1,800 at claim time.
The right structure for most Texas contractors: A hybrid — blanket coverage for tools under a certain threshold (say, $5,000 per item) and scheduled coverage for high-value machinery and equipment. Talk to your broker about where to draw that line based on your inventory.
Rented and Borrowed Equipment
If you regularly rent equipment from United Rentals, Sunbelt, H&E, or local yards, your standard contractor's equipment policy may not automatically extend to rented equipment. The care, custody, and control exclusion in your GL already creates a gap. An inland marine policy without a rental endorsement may have its own exclusions for property you don't own.
A rented/leased equipment endorsement addresses this by explicitly extending coverage to equipment you rent or borrow. It typically:
- Sets a per-item limit for any single rented piece
- Allows you to list the rental company as a loss payee on certificates
- Covers accidental damage, theft, and other physical losses to rented equipment
If rental equipment is a significant part of your operation — you rent before you own, or you rent for specialty tasks — make sure this endorsement is on your policy and that the per-item limit is adequate for the equipment you actually rent. See our detailed guide on COI requirements for equipment rental for the certificate side of this.
Jobsite Theft: The Most Common Claim
Trailer theft is the single most common claim for small and mid-size Texas contractors. A cargo trailer with $15,000 to $40,000 in tools, equipment, and materials, unlocked overnight on a jobsite or in a parking lot, is a consistent target.
Inland marine policies cover theft, but the conditions matter:
- Theft from an unattended vehicle — most policies cover this, but some require the vehicle to be locked and parked in a secure location. Read the conditions.
- Jobsite theft — generally covered, but check whether your policy requires equipment to be secured (chained, locked) during non-working hours.
- Mysterious disappearance — some policies exclude this (equipment that's "gone" but no evidence of theft). Know whether your policy requires a police report.
Best practice for claim defense: photograph your trailer contents at the start and end of each job week. Keep receipts for significant tool purchases. File a police report immediately for any theft. Insurance adjusters can challenge "mysterious disappearance" claims; a police report and documentation make your position much stronger.
Coverage for Tools and Equipment in Vehicles
Your commercial auto policy covers your vehicle. It does not cover the contents of that vehicle. An electrician's van with $25,000 in tools is a commercial auto claim for the van and an inland marine claim for the tools — if you have an inland marine policy. Without it, tool theft from a vehicle is entirely out of pocket.
Texas contractors frequently discover this gap after their first vehicle break-in. Tools get stolen; they call their auto insurer; they're told the tools aren't covered under commercial auto. A contractor's equipment policy with theft coverage would have covered the tools.
What Contractor's Equipment Coverage Costs in Texas
Premiums depend on total insured value, equipment type, location, deductible, and your prior loss history. General ranges for Texas contractors:
| Insured value of equipment | Approximate annual premium range | Notes |
|---|---|---|
| $10,000–$30,000 | $300–$800/year | Small hand-tool and power-tool inventories |
| $30,000–$75,000 | $700–$1,800/year | Small to mid-size trade contractors |
| $75,000–$200,000 | $1,500–$4,500/year | Mid-size operations, some heavy equipment |
| $200,000–$500,000 | $3,500–$10,000+/year | Larger operations with multiple crews and machines |
Premium varies significantly by equipment type (heavy iron costs more per dollar of value than hand tools), loss history (prior theft claims increase rates), and deductible (a $2,500 deductible vs. a $500 deductible can meaningfully reduce premium). These ranges are directional — your actual quote will depend on your specific program.
Replacement Cost vs. Actual Cash Value
This choice affects every claim you file. Replacement cost pays what it costs to replace an item new with a comparable item. Actual cash value pays replacement cost minus depreciation — what the item was worth at the time of loss.
For equipment with long useful lives (excavators, generators, compressors), replacement cost is worth the extra premium. A five-year-old excavator that cost $80,000 new might settle for $45,000 on actual cash value when a replacement still costs $80,000 or more.
For hand tools that depreciate quickly, the difference is smaller. Ask your broker to compare the premium difference between RC and ACV — for most contractors, replacement cost on at least the scheduled high-value items is worth paying for.
What to Ask Your Broker
- Do I have any existing inland marine coverage, or is my equipment entirely uninsured for physical loss?
- Is coverage scheduled, blanket, or both? What's the per-item limit?
- Does the policy cover equipment on a jobsite overnight? What security conditions apply?
- Does it cover theft from my vehicle? From a trailer?
- Is rented or borrowed equipment covered? What's the rental limit?
- Is coverage on replacement cost or actual cash value?
- What's the deductible?
- Does coverage follow my equipment to other states if I work across state lines?
For context on how equipment coverage fits into your full contractor insurance program, see our construction insurance guide and the related piece on tools, equipment, and trailers.
Frequently Asked Questions
My homeowners policy covers some tools — do I need a separate inland marine policy?
Homeowners policies typically cover business property only incidentally — limits are low (often $2,500 or less) and coverage excludes business use. If tools are used for your contracting business, even part-time, the homeowners policy almost certainly will not respond to a business-use claim. You need a commercial inland marine policy.
My GL policy has a "property damage" section. Why doesn't it cover my tools?
GL covers property damage you cause to others — it's a liability coverage. Your tools are your property. Your policy's first-party property coverages (if any) are in the commercial property and inland marine sections, not in GL. These are different coverage forms covering different risks.
Do I need inland marine if I'm just a handyman or light remodeler?
If you carry tools to jobsites, you have an inland marine exposure. Whether you need a formal policy depends on the value of your tools and your risk tolerance. A handyman with $3,000 in tools might reasonably self-insure that exposure. A handyman with $15,000 in tools including specialty equipment has a real exposure worth insuring. See also our guide to handyman and remodeler insurance for the full coverage picture.
What's the minimum I should carry for equipment coverage?
Walk through your shop and trucks and add up what it would cost to replace everything — not the depreciated value, but what you'd pay at a tool supplier or equipment dealer today. That number is your insured value floor. Many contractors are surprised to find they're carrying $30,000 to $80,000 in tools when they actually count.