For many contractors and tradespeople, tool theft from a truck, van or jobsite is one of the most common and frustrating losses. It can stop work for days while you replace what's missing. Many owners assume their commercial auto policy will pay. Usually it won't. This guide explains which policy actually covers stolen tools, the conditions that can trip up a claim and how to set up coverage before a loss. For an overview, see our tools and equipment insurance for contractors page.
Why commercial auto usually doesn't cover tools
Commercial auto physical damage coverage protects the vehicle itself, and sometimes permanently installed equipment. Tools and equipment carried in the vehicle are generally not covered. A comprehensive claim may cover a broken window or damaged lock, but not the tools that were taken.
Your homeowners policy is also unlikely to help. Homeowners policies typically limit or exclude business property, especially away from the home. See our guide to home-based business insurance.
The right coverage: inland marine tools and equipment
Tools and equipment coverage, often called a contractor's equipment floater or installation floater, is a type of inland marine insurance. It covers movable property that travels between jobsites, your shop and your vehicle. It's often added to a business owner's policy (BOP) or written as a separate policy.
What it may cover
- Hand and power tools
- Ladders, scaffolding and small equipment
- Larger equipment like generators, compressors and mini excavators, if scheduled
- Property in transit, at jobsites and in storage
Scheduled vs. unscheduled
- Scheduled equipment: individual items listed with serial numbers and values, usually higher-value pieces.
- Unscheduled tools: a blanket limit for smaller items, often with a per-item maximum.
If a valuable item isn't scheduled, a per-item limit may cap what you get paid.
Replacement cost vs. actual cash value
Replacement cost pays to buy new, comparable tools. Actual cash value subtracts depreciation, which can leave you well short for older tools. Ask which applies.
Conditions that can affect theft claims
Read the theft conditions carefully. Common examples:
- Locked vehicle requirement: Theft from an unattended vehicle may be covered only if the vehicle was locked and there are visible signs of forced entry.
- Enclosed compartment: Some policies require tools be stored in a locked, enclosed toolbox or compartment, not an open truck bed.
- Overnight exclusions: Some policies limit theft from vehicles left overnight unless parked in a locked garage.
- Mysterious disappearance: Tools that simply go missing, with no evidence of theft, are often excluded.
- Unattended jobsites: Some policies require jobsites be secured.
- Employee theft: Theft by your own employees is often excluded.
If you regularly leave tools in a vehicle overnight, tell your broker and get coverage that fits.
Other situations to consider
Employees' personal tools
If employees bring their own tools, check whether your policy covers employee tools and up to what limit. Some policies offer this as an option.
Rented or borrowed equipment
Equipment rented from a rental company may require you to carry coverage or buy the rental company's damage waiver. Your policy may offer rented equipment coverage, sometimes with a limit and a requirement to cover rental costs while repairs are made.
Leased equipment
Lease agreements often require insurance and naming the lessor as loss payee.
Equipment breakdown
Inland marine policies usually exclude mechanical breakdown and wear and tear.
What to do after a theft
- Call the police and get a report number. Insurers typically require it.
- Photograph the vehicle damage and scene.
- List what's missing with descriptions, serial numbers and estimated values.
- Notify your broker or insurer promptly.
- Gather receipts, photos or bank records showing ownership.
- Check pawn shops and online marketplaces, and give the police serial numbers.
- Separate claims: Vehicle damage may go under your auto policy and tools under your inland marine policy, each with its own deductible.
Deductibles and small losses
A high deductible keeps premiums lower but can make small thefts not worth claiming. Choose a deductible you could comfortably pay several times a year, and weigh how often your tools leave the shop.
Preventing tool theft
- Keep an inventory with photos and serial numbers, and update it when you buy tools.
- Engrave or mark tools with your business name or a unique ID.
- Use locking truck boxes, vault-style storage or locking van shelving.
- Park in well-lit areas or locked garages overnight.
- Remove tools from vehicles when possible.
- Install GPS trackers on high-value equipment.
- Use alarms and cameras at your shop and on vehicles.
- Limit access to tool storage areas.
Checklist
- ☐ Confirm your commercial auto doesn't cover tools in the vehicle
- ☐ Buy inland marine tools and equipment coverage
- ☐ Schedule high-value items
- ☐ Ask about replacement cost
- ☐ Read theft conditions for vehicles and jobsites
- ☐ Add employee tools and rented equipment if needed
- ☐ Keep an updated inventory
- ☐ See contractor insurance and what happens after a license bond claim
Contact Alishahi Insurance or call (877) 711-4545 to review your tools coverage.
Frequently asked questions
Does commercial auto insurance cover tools stolen from my truck?
Usually no. Commercial auto physical damage covers the vehicle, not tools inside it. Tools are typically covered under inland marine tools and equipment coverage.
Does homeowners insurance cover my work tools?
Homeowners policies typically limit or exclude business property, especially away from home.
What is a contractor's equipment floater?
An inland marine policy that covers movable tools and equipment at jobsites, in transit and in storage.
Why was my tool theft claim denied?
Common reasons include no signs of forced entry, tools left in an open truck bed, overnight vehicle exclusions, or mysterious disappearance.
Are employees' tools covered?
Only if your policy includes employee tools coverage. Ask your broker.
Alishahi Insurance · 439 N Canon Dr, Penthouse, Beverly Hills, CA 90210 · (877) 711-4545 · CA License #4348151. General information only. This isn't legal, tax or financial advice or a coverage determination. Coverage depends on policy language and underwriting, and rules vary by state.