There are many different policies to choose from when you’re building the insurance protection that’s right for your construction business. Builders risk and inland marine are both important policies for contractors to consider, but they overlap in one key area: both provide coverage for your tools and equipment.
How should you determine which will work best for you?
What is Builders Risk Insurance?
Builders Risk Insurance, also known as course of construction insurance, protects a project from accidents while construction is being completed. This coverage includes the building materials, supplies, and equipment involved. Builders risk generally protects you from incidents such as:
Builders risk insurance is frequently written on a short-term basis, ranging from three to twelve months, but these terms can be extended if necessary. Builders risk can also cover the materials used to work on the property while they’re in transit or temporary storage, and this is where it can overlap with inland marine coverage.
What is Inland Marine Insurance?
Inland Marine Insurance covers your tools and equipment while you take them to and from a project site. In the insurance biz, we call this a floater policy. That means the coverage goes wherever you go. Inland marine covers property that is in transit and property in the control of another person, such as:
- Tools taken to and from a job site
Inland marine is also known as tools and equipment coverage, and it protects the power tools you transport to and from a worksite, as well as the tractor that one of your employees is using for the day. This is an essential policy for contractors who frequently work on other people’s property.
What’s with the name?
If the term “inland marine” confuses you, you’re not alone. It sounds like something you need to insure a yacht or fishing boat rather than a contractor’s tools. The term is an old one, dating back to the industrial revolution. During that era, goods that had previously been transported by ship began to be moved by train and other land-based transportation. Marine Insurance companies expanded their coverage to offer Inland Marine Insurance for goods moved on land, and the definition of the term has expanded since then to refer to a type of property insurance in transit.
Which Contractor Insurance Policy Will You Need?
The overlap between the two policies can be confusing. Both inland marine and builders risk will cover tools and other property in transit, but for different reasons. Builders risk is intended to cover short or long-term construction projects, whereas inland marine protects your tools on a day-to-day basis.
If you’re a handyman, subcontractor, artisan tradesperson, or part of a small contracting business, inland marine insurance will be an important part of your insurance package. If you only work on a project for a couple days at a time before moving on, then it’s most important that your expensive tools and equipment are insured.
However, If you are a general contractor or project owner, you may need builders risk insurance for the individual projects you work on. In this case, the insurance is protecting the construction project itself and the tools associated with it by extension.
Keep in mind that some builders risk policies only cover damages done to the property itself, and may not cover your tools. Read through your builders risk policy carefully- if it doesn’t cover your equipment, you may need both types of coverage.
While builders risk insurance and inland marine insurance may overlap to cover your tools and equipment, they cover your equipment for different reasons. Builders risk protects your equipment only as part of a particular project site. Inland marine is intended to insure the equipment itself as you take it to and from project sites on a daily basis. If you’re not sure which one will work best for your business, let one of our experienced construction insurance professionals help you decide.