Are Your Tools Covered If Your Work Truck Is Totaled?

Your Truck Got Totaled. Now What About the $20,000 in Tools That Were Inside?
Cole Rarrick | Founder, President. Mountain View Insurance Services
​
This is the kind of thing nobody thinks about until it happens, and by then it is too late to fix.

Picture it. You are standing in a parking lot, staring at where your work truck used to be, trying to figure out how you are going to finish Monday's job. You are already mentally past the truck. You know you have auto insurance to handle the vehicle, even if the depreciated payout makes you grumble. What stops you cold is the next conversation, the one where you find out your tools are a completely separate problem.

So let's talk about that problem before it becomes yours.

The auto policy covers the truck, not what's in it

Your commercial auto policy is built to cover the vehicle. The metal, the engine, the seats. If it gets stolen or totaled, the carrier pays out the actual cash value, which is almost always less than you think it should be because of depreciation. That part stings, but most business owners at least understand the concept.

What surprises people is what happens to everything that was inside. The table saw, the impact drivers, the laser level, the ladders strapped to the rack, the bins of bits and blades and fasteners. None of that is part of the auto claim. The auto policy does not care about your tools. It covers the truck.

And before you ask, no, your property policy will not pick up the slack either. A standard commercial property policy generally covers things at your location. Once your tools leave the building and head out into the world, they fall into a coverage gap.

​Enter the inland marine policy

The fix lives inside a policy called inland marine. The name is confusing because it has nothing to do with boats or oceans. Inland marine is the bucket of coverage built specifically for property that moves around. Tools, equipment, materials in transit, stuff at a jobsite, stuff in your vehicle. That is what inland marine is designed to handle.

If you own tools and you take them anywhere other than your shop, you need an inland marine policy. Full stop. Some people call it a tools and equipment policy or a contractor's equipment policy. Same idea.

​The second surprise: per item limits

Here is where the next gut punch lives. You think you have a $20,000 inland marine policy, and you assume that means $20,000 of coverage when something goes wrong. Then a claim happens, and the carrier says, sure, here is $500 per tool.

That is not a typo. A lot of these policies have a per item sublimit. The total limit might be $20,000, but if any single tool is capped at $500, your $1,400 track saw just became a $500 track saw. Your $1,800 rotary hammer just became a $500 rotary hammer. You see where this is going.

The fix is simple. You raise the per item limit, or you schedule the expensive tools individually so they are covered for their actual value. For high dollar items, scheduling is the way to go. The carrier knows exactly what the tool is, what it is worth, and you do not have to argue about it later.

Here is the best part. Fixing this is cheap and easy. Bumping a per item limit or scheduling a few pricey tools usually costs almost nothing relative to what you would lose in a claim. It is one of the easiest wins in a commercial insurance program, and it just takes a broker who is paying attention and not passing along the default quote from the insurance company.

​5 questions to take to your broker

If you want to make sure this is buttoned up, here are the questions to ask. Copy these, send them in an
email, and ask for written answers.

1. Do I have an inland marine policy in place, and what is the total limit?
2. What is the per item sublimit, and which of my tools would get capped under it?
3. Which of my higher value tools should be scheduled individually, and at what values?
4. Is coverage on a replacement cost basis or actual cash value?
5. Does the policy cover my tools everywhere they go, including in the vehicle, at the jobsite, and
in transit?

If your broker cannot answer these quickly and clearly, that is information too.

The truck getting totaled is bad enough. Losing the contents on top of that and then finding out your policy only covers a fraction of what you assumed, is the kind of avoidable pain that ends careers. Spend twenty minutes with your broker this month. Future you will be grateful.

---