Equipment floater insurance for contractors

An equipment floater is the policy that covers your machines themselves — the skid steer, the excavator, the dozer on the lowboy — against physical loss and damage, wherever they happen to be when it goes wrong. It is filed as inland marine insurance, and older hands still call it contractors equipment insurance. All three names describe the same thing.

The reason it matters more than its unglamorous name suggests is that almost nothing else on a contractor’s program pays to fix a machine. Liability policies pay other people. Property policies are tied to an address, and a machine that stays at one address is a machine that is not earning. The floater is the line built for equipment that moves for a living, which is why we treat it as the account rather than as an add-on.

This page is the long version: what the form covers, how the schedule is built, how machines are valued, where the floater stops and another line takes over, and what your general liability policy will not do for you no matter how much of it you buy.

What an equipment floater covers — and what it does not

A floater covers direct physical loss or damage to the equipment you own. The familiar causes are theft from a jobsite or yard, fire, vandalism, collision and overturn, and weather. Because it is an inland marine form rather than a property form, coverage generally follows the machine rather than a location — the same unit is insured whether it is sitting behind your fence, chained to a trailer on the interstate, or parked in mud on a site three counties away.

What it does not do is just as important. A floater is not a maintenance contract: wear and tear, gradual deterioration, rust and mechanical or electrical breakdown from ordinary use are excluded on essentially every form. It does not respond to damage the machine causes to someone else’s property, which is liability. It does not cover employee injury, which is workers compensation. And it does not automatically cover machines you do not own, which is the single most common misunderstanding in this class and is dealt with in its own section below.

Scheduled and blanket: how the equipment schedule is actually built

Nearly every real floater is built two ways at once. Larger units are scheduled — listed individually by year, make, model, serial number and insured value, each carrying its own limit. Underwriters want the detail because a machine is not a fungible commodity; two units of similar size can present very different theft and overturn risk depending on how they are used and where they sleep.

Smaller items — hand tools, attachments, compaction plates, saws — usually sit under a blanket limit instead. The blanket exists because scheduling low-value items individually costs more in administration than it will ever return at claim time. The trade-off is that a blanket carries a per-item sublimit as well as an overall limit, and an attachment worth more than the per-item sublimit needs scheduling whether it feels like a “tool” or not. High-value attachments are the usual casualty of that assumption.

The schedule is the living part of the policy, and the part most likely to be wrong. Machines get bought, sold, traded and totaled; schedules do not update themselves. A schedule that has not been reviewed since binding is the most reliable predictor of a disappointing claim that we see in this class.

Newly acquired equipment: the clause that buys you time, not coverage

Because schedules go stale, most floaters carry a newly-acquired-equipment clause. It automatically extends coverage to a machine you buy mid-term, up to a stated limit, for a defined reporting window — provided you report the purchase inside that window.

Two things about that clause are worth reading carefully rather than assuming. The first is that it is a grace period, not permanent coverage: report late and the automatic extension has already lapsed. The second is that it carries its own limit, which is frequently lower than the value of a serious machine. A contractor who buys a large unit in the spring, assumes the clause has it handled, and reports it at renewal has been uninsured on that unit for most of a season without ever receiving a warning.

Valuation: actual cash value, agreed value and replacement cost

How a machine is valued decides what you are actually buying, and it is where two quotes that look alike stop being alike.

Actual cash value settles at the depreciated value of the machine at the time of loss. It is the cheapest basis and the most common default. Its weakness shows on older iron in a tight used market: depreciation is calculated against the machine’s age, while replacement is priced against what comparable used units actually sell for, and those two numbers can part company badly.

Agreed value fixes the settlement figure between you and the carrier when the policy is bound, which takes the depreciation argument off the table entirely at claim time. It costs more and it requires supporting valuation up front — appraisals, purchase documentation, or a schedule the underwriter is willing to accept. For specialized or hard-to-source machines it is usually worth the trouble.

Replacement cost appears on some forms for newer equipment, often with an age cut-off, and settles at the cost of a comparable new unit. Where it is available and the fleet is young, it is the strongest basis of the three.

The practical point is that valuation is a decision, not a default. If nobody has asked you which basis your schedule is written on, it is worth finding out before you need to know.

Deductibles and how the structure moves the price

Floater deductibles are usually applied per occurrence, and on larger schedules they are often set per item as well, so that one bad day involving several machines does not produce several full deductibles — or, on a differently worded form, does exactly that. Which of those two it is should be a conscious choice.

Certain perils attract their own treatment. Theft frequently carries a higher deductible than other causes of loss, because theft is the peril underwriters expect to see most often on this class and the one most influenced by how you store the fleet. In some regions, wind, hail or flood are written with percentage deductibles calculated against insured value rather than a flat figure.

Raising a deductible is the most direct lever you have on premium, and the one most often pulled without checking whether the business could absorb the retained loss on its worst plausible day rather than its typical one.

Owned, rented in, rented out: where the floater stops

This is the seam that causes the most trouble in this class, so it is worth being blunt about it.

The floater covers machines you own. A machine you rent or lease in from a rental house is not yours, and the obligations you carry for it are set by the rental contract rather than by your own policy — which is why it belongs on a rented and leased equipment line. Rental agreements routinely impose responsibilities broader than a standard floater would answer, including loss of rental income while the damaged unit is out of service, and the damage waiver offered at the counter is not the same product as insurance.

Renting your own machines out to others is different again. It changes who is operating the equipment, and most floaters are underwritten on the assumption that your own people are running it. It is not automatically excluded, but it is a conversation to have before it happens rather than after.

Lienholders and loss payees

Financed equipment brings a third party onto the policy. A lender is normally added as a loss payee against the specific scheduled unit it financed, so that a loss payment on that machine is issued jointly rather than to you alone. Lease agreements often go further and require the lessor to be named with its own interest and to receive notice of cancellation.

Mechanically this is routine. It becomes a genuine problem in exactly one situation: when the schedule is out of date. A lienholder still listed against a machine you sold, or a newly financed unit that never made it onto the schedule at all, are both signs of the same underlying issue, and both surface at the worst possible moment — when a certificate is requested, or when a claim is being adjusted.

Transit: the floater’s native territory

Inland marine exists because ordinary property insurance stopped at the property line and commerce did not. Coverage for goods in transit is the origin of the whole line, which is why transit usually sits naturally on the floater rather than somewhere else.

The detail worth understanding is who is doing the hauling. A machine on your own trailer, behind your own truck, driven by your own operator is the straightforward case. Hand the same machine to a hired hauler and the picture changes: the carrier has its own liability, that liability is usually limited, and the gap between what the hauler owes you and what the machine is worth is a gap somebody is carrying. Where the movement is a regular part of how you work rather than an occasional event, it deserves deliberate treatment — see transit and trailer transport.

What general liability will not do for your machine

This is the monoline argument, made technically rather than asserted.

General liability responds to bodily injury and property damage that you cause to third parties. If your dozer clips a neighboring building, GL is the policy that answers for the building. What it will not do — under any amount of limit, on any standard form — is pay to repair the dozer. Damage to your own property is not what the insuring agreement covers, and property in your care, custody or control is typically excluded outright on top of that.

The consequence is that buying more liability does not move you closer to having your equipment insured. They are answers to different questions, and no amount of one substitutes for the other. This is precisely why we do not require you to buy a package to get a floater: bundling addresses a distribution preference, not a coverage gap. If your general liability is already in force and you are content with it, that is a reason to leave it alone, not a reason to move it.

Where the machine sleeps: the underwriting question behind the price

If you want to understand why two contractors with similar fleets get very different terms, start with storage. Theft is the peril that defines this class, and theft risk is driven less by what the machine is than by where it sits when nobody is watching it.

Underwriters are asking a short list of questions, whether or not they put them in that order. Is the equipment returned to a yard at night, or left on site for the duration of the job? Is the yard fenced, lit, gated, and is the gate actually locked? Is there camera coverage, and does anyone review the footage? Are keys stored with the machines or taken away? Are telematics or aftermarket trackers fitted, and are they active on the units that matter rather than on the truck fleet only? Is the site attended overnight, or is it empty from six in the evening until seven the next morning?

None of that is box-ticking. Site-left equipment is a materially different proposition from yard-returned equipment, and the smaller and more road-portable the machine, the wider that gap becomes. A compact unit that can be driven onto a trailer by one person in a few minutes is exposed in a way a large tracked machine simply is not. It is also the reason theft deductibles are often set apart from the rest of the schedule: the carrier is pricing the storage habit, not the machine.

The practical consequence is that storage is one of the few levers on this policy that you control directly and that pays back in more than premium. Recovery rates on tracked equipment are not comparable to recovery rates on untracked equipment, and a machine recovered is a job that carries on rather than a claim that has to be settled before you can replace it.

What a floater submission actually needs

Quoting equipment is largely an exercise in having the right information, and the difference between a fast, competitive quote and a slow, defensive one is usually the quality of the schedule rather than anything about the risk itself.

A workable submission carries the schedule first: each significant machine by year, make, model, serial number and the insured value you want on it, along with the valuation basis you are asking for. Serial numbers matter more than people expect — they are what makes a unit identifiable to a carrier, to law enforcement after a theft, and to a lender being added as a loss payee. A schedule of descriptions without serial numbers is the most common reason a quote comes back with questions attached.

Alongside it, an underwriter wants loss history for the class — what has been claimed, when, and what changed afterwards. A loss run showing a theft followed by a yard that got fenced reads very differently from the same theft with nothing changed. Then the operational picture: your normal radius of operation, whether machines cross state lines, whether anything is rented in or rented out, whether equipment is left on site, and who is operating it.

Where financing is involved, the lender or lessor details belong in the submission rather than arriving afterwards as an amendment. And if any machine is unusual — specialized, heavily modified, or hard to source second-hand — say so up front. That is the kind of unit where agreed value is worth arranging, and it is far easier to arrange at quote stage than to renegotiate after a total loss has already happened.

Common claim categories

Four categories account for most of what we see on this class. Described without figures, because severity varies so widely by machine and circumstance that an average would mislead more than it informed.

• Overnight theft from an open or lightly secured site. The dominant loss driver in this class, and the one most responsive to how and where the fleet is stored. Smaller, road-portable machines are taken far more often than large tracked units, for obvious reasons.
• Overturn, upset and collision — frequently in transit. Loading and unloading is over-represented relative to the time it occupies, which is why transit terms repay a close reading.
• Fire and hydraulic events. Often argued at the boundary between a covered fire and excluded mechanical breakdown, which is where the wording of the exclusion does the real work.
• Weather and water at a staging yard. Where equipment is parked matters as much as how it is used, and low-lying storage is a recurring theme.

Limits and structure

Limits on a floater are built from the bottom up rather than chosen from a menu. The scheduled limit on each machine should reflect what replacing that unit would actually cost on the basis you have selected, not what you paid for it or what it shows on a depreciation schedule prepared for a different purpose entirely.

Above the individual limits sit the structural questions: the blanket limit and its per-item sublimit, whether there is a policy maximum for any single occurrence, whether transit and off-premises coverage carries sublimits of its own, and how the newly-acquired-equipment limit compares with the machines you are realistically going to buy this year. Each of those is somewhere a schedule that looks adequate in total can turn out to be inadequate in the specific place you needed it.

Why Equipment Guard Insurance

We are an independent agency, and equipment is the account rather than the afterthought. We place these floaters on a wholesale and brokered basis through the markets named on our homepage — the whole panel is listed there, because a market list that will not stand being published is not much of a credential.

The reason the panel matters is availability rather than volume. A number of markets in this class will not look at a schedule of equipment unless supporting lines come with it, and knowing which will and which will not is most of the work. That is what makes writing you equipment-only possible, and it is why we do not treat “no bundle required” as a slogan.

Frequently asked questions about the equipment floater

Is an equipment floater the same thing as contractors equipment insurance?

In practice, yes. “Contractors equipment insurance” is the trade name; “equipment floater” is what the form is called; “inland marine” is the line of business it is filed under. Different people in the same transaction will use all three for the same policy, which is worth knowing when you compare two quotes and cannot tell whether they cover the same thing.

Do I have to schedule every machine, or can I insure them as a group?

Both, and most programs use both. Larger units are scheduled individually with their own limits, because the carrier wants to know what it is insuring. Small tools and attachments usually sit under a blanket limit instead, since listing every one of them would cost more in administration than it would ever return in a claim.

What happens if I buy a machine mid-term?

Most floaters include a newly-acquired-equipment clause that extends coverage automatically for a defined reporting window, up to a stated limit, provided you report the purchase within that window. The clause is a grace period, not permanent coverage — the exposure people run into is buying in spring and reporting in autumn.

Should my machines be insured at actual cash value or agreed value?

It depends on the age of the iron and how replaceable it is. Actual cash value settles at depreciated value, which can fall well short of what a comparable used machine actually costs. Agreed value fixes the settlement figure when the policy is bound, which removes the depreciation argument at claim time but requires supporting valuation up front.

Does the floater cover a machine I rent from a rental house?

No — that belongs on a rented and leased equipment line, which responds to what your rental contract makes you responsible for. Rental agreements often impose obligations broader than your own floater would cover, which is why the two lines sit side by side rather than one replacing the other.

My general liability policy is in force. Is my equipment covered under it?

No. General liability responds to injury and property damage you cause to others. It does not pay to repair or replace your own machine, and it generally excludes damage to property in your care, custody or control. That gap is the reason the floater exists and the reason bundling more liability does not close it.

Is my equipment covered while it is on a trailer?

Transit is where inland marine started, so the floater is usually the right home for it — but the terms vary by form, and it changes again if a hired hauler is moving the machine rather than your own truck. We look at how your machines actually travel before deciding where transit sits on the schedule.

My lender wants to be listed on the policy. How does that work?

A lender is normally added as a loss payee against the specific scheduled machine it financed, so that a loss payment on that unit is made jointly. It is an administrative detail that becomes a real problem when the schedule is out of date — a lienholder listed against a machine you sold two years ago is a sign the schedule needs a review.