Does builder's risk insurance cover tools and equipment?
Builder’s risk insurance rarely covers contractor tools or equipment. You typically need a separate inland marine policy for full protection in Colorado and Utah.
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Complete Guide to Builder’s Risk Insurance and Equipment Coverage
Why This Question Matters for Colorado and Utah Residents
The line between what builder’s risk covers and what requires inland marine insurance often confuses contractors and business owners across Colorado and Utah. What you assume is protected could leave your jobsite exposed to serious financial loss—especially with weather events and theft common along the Front Range and Wasatch regions.
- Frequent severe weather: Hail, floods, and windstorms account for 68% of regional claims—damaging tools and equipment left on jobsites from Fort Collins to Salt Lake City.
- High cost of equipment downtime: The average claim for weather-related equipment damage is $28,000, with additional business interruption often exceeding $18,000/day while repairs are underway.
- Policy confusion risks: Many Colorado and Utah builders believe builder’s risk covers everything on the site, but most policies exclude tools, contractor equipment, and employee property—leading to costly gaps.
What Most People Get Wrong
The biggest misconception is thinking that builder’s risk offers blanket coverage for all equipment and tools at a construction site. In reality, builder’s risk is designed to cover buildings and permanent materials during construction—not the contractor’s own mobile assets or tools.
Another common error is failing to realize that specialty coverage—like a separate inland marine policy—is usually needed for protection against loss or damage to tools, whether they’re on-site, in transit, or stored off-site.
The Complete Picture
Builder’s risk addresses only certain property directly involved in the construction project—think lumber, steel, roofing, and fixtures that will become part of the finished structure. To protect the tools and equipment you rely on for daily operations (from backhoes to hand tools), you will typically need a dedicated inland marine insurance policy. Inland marine covers movable property—including contractor’s tools, mobile equipment, and materials in transit—whether you’re moving between job sites in Boulder, Denver, Provo, or Park City.
Many builders add specific endorsements for hail or flood (vital in Colorado and Utah) to inland marine coverage, since standard builder’s risk and some inland marine policies may exclude these events. Pay close attention to your policy language: about 35% of the region’s businesses are uninsured for such equipment, despite 82% storing or moving valuable tools. The right combination of builder’s risk, inland marine, and proper endoresments can mean the difference between a swift recovery and a costly project delay if disaster strikes.
Making the Right Decision for Colorado and Utah Residents
Question 1: What coverage truly protects your project’s essential tools and equipment?
The first step is understanding the difference between builder’s risk and inland marine:
- Builder’s risk covers new structures and materials before completion.
- Inland marine covers movable property—contractor's tools, machinery, rented equipment—whether on-site, in transit, or temporarily stored.
Ask your FoCoIns advisor for a policy review to confirm your current protection.
Question 2: Are your policy limits and endorsements right for local risks?
With extreme hail and flash flooding increasingly common from Fort Collins to Salt Lake City, make sure endorsements for weather events are included on your inland marine policy. Also, verify deductibles, limits, and whether rental reimbursement is included if essential equipment is damaged.
Question 3: How does equipment downtime affect your cash flow and project deadlines?
Don’t just calculate replacement costs—consider the true impact of downtime. For example, losing a $20,000 excavator can mean $2,000–$4,000 in lost income every day it’s out of action. Coverage for rental equipment and business interruption is essential for project continuity.
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Real World Examples
Fort Collins Hailstorm: When Builder’s Risk Wasn’t Enough
Background: Jake, a general contractor in Fort Collins, left several tools and a compact loader at a new home construction site off Harmony Road overnight.
Coverage: Builder’s risk covered the unfinished home but excluded Jake’s tools and loader. Jake only had bare minimum coverage for his equipment.
Monthly Premium: $225/month ($2,700/year for basic inland marine)
The Incident: A severe hailstorm struck, causing over $13,000 in damage to Jake’s loader controls and waterlogging his power tools.
Total Claim Cost: $13,800 (Loader: $12,200; tools: $1,600)
Jake’s Cost: $2,000 — He paid the deductible and the rest was not covered by his builder’s risk, highlighting the gap.
“I thought my builder's risk policy had me covered, but after the hail hit my equipment, I learned the hard way that's not the case. Now, I won't start a job without inland marine.”
Salt Lake City Roadwork: Fast Recovery Thanks to Inland Marine
Background: Sarah owns a paving company in Salt Lake City handling projects along I-15. She had invested in an inland marine policy for her specialty equipment.
Coverage: Blanket inland marine policy for all mobile equipment, with hail and flood endorsements.
Monthly Premium: $340/month ($4,080/year)
The Incident: Flash flooding caught her crew off guard, damaging a $46,000 skid steer and $3,000 in power tools.
Total Claim Cost: $19,400 (Skid steer repairs: $16,900; tools: $2,500)
Sarah’s Cost: $1,500 — Just her deductible, with rental reimbursement included so the job finished on time.
“Our inland marine coverage didn’t just replace equipment—it saved our deadline and our client relationship. Absolutely essential in Utah.”
Denver Remodel: Tools in Transit, Coverage in Question
Background: Alex, a Denver remodeler, frequently moved specialized tools between sites in Capitol Hill and Cherry Creek but wasn’t sure about his existing coverage.
Coverage: Builder’s risk policy for remodel site only—no inland marine for tools or transit.
Monthly Premium: $190/month ($2,280/year for builder’s risk)
The Incident: During a routine trip, Alex’s van with $14,000 in specialty tools was sideswiped; most tools were lost or damaged.
Total Claim Cost: $13,500 (after partial recovery of salvageable tools)
Alex’s Cost: $12,500 — Builder’s risk didn’t cover tools in transit; only a small auto policy limit applied.
“Losing those tools almost sank my business. I’ll never assume I’m covered again—having the right inland marine would have changed everything.”
Avoid These Common Mistakes
Mistake #1: Assuming Builder’s Risk Covers All Equipment
What People Do: Rely on the builder’s risk policy to protect not just the building, but also contractor’s tools, machinery, and employee-owned equipment.
Why It Seems Logical: Since everything is on the same site, it feels like ‘construction insurance’ should handle any damage or theft.
The Real Cost: In Colorado and Utah, losses average $13,000–$28,000 for tools and equipment after major hail or theft incidents. Most builder’s risk policies will deny these claims, leaving out-of-pocket expenses and project delays.
Smart Alternative: Ask a FoCoIns specialist to review your jobsite risks and layer a dedicated inland marine policy (often $2,000–$5,000/year) with proper endorsements for full protection of tools and mobile equipment.
Mistake #2: Skipping Weather Endorsements in High-Risk Areas
What People Do: Purchase a basic inland marine policy without hail or flood endorsements, especially when storing equipment outdoors or moving between sites.
Why It Seems Logical: It keeps premiums low, and weather events might seem rare or avoidable.
The Real Cost: Recent claims data shows 68% of losses are weather-related. Repairs from single events can cost $12,000–$175,000, jeopardizing a business’s future.
Smart Alternative: Tailor your inland marine with local endorsements—FoCoIns can negotiate with top carriers for region-specific hail and flood coverage, often for just 8–15% extra in premium.
Mistake #3: Overlooking Equipment in Transit
What People Do: Insure equipment only at job sites, ignoring risk exposures while moving between locations—especially for tools stored in vehicles.
Why It Seems Logical: Accidents seem less likely than on-site incidents, or existing auto/commercial policies are assumed to be enough.
The Real Cost: With average losses of $10,000–$35,000 per event, and most builder’s risk and auto policies offering minimal or no coverage for tools in transit, contractors are left mostly unprotected.
Smart Alternative: Bundle inland marine and commercial auto coverage; FoCoIns experts help you map true risk exposures and ensure no gaps for your tools, whether moving across Denver or Salt Lake City.
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