A contractor arrives at a job site on Monday morning and discovers that $40,000 worth of tools and equipment have been stolen over the weekend. The equipment was essential to the project, and replacing it immediately would put significant pressure on the company's cash flow.
Many business owners assume their commercial property insurance or general liability policy will cover the loss. Unfortunately, neither policy necessarily protects equipment that regularly moves between job sites.
This is where equipment floater insurance becomes important.
Equipment floater insurance is a type of commercial property insurance that protects portable tools, machinery, and mobile equipment against covered physical loss or damage while being transported, stored, or used at different locations. It is particularly valuable for Canadian contractors, construction companies, landscapers, and businesses that depend on expensive equipment outside their primary premises.
Whether you operate an excavation company in Toronto, an HVAC business in Mississauga, or a landscaping company in Vaughan, losing essential equipment can affect your ability to complete contracts and generate revenue.
Understanding how equipment floater insurance works can help you avoid unexpected expenses and choose the appropriate protection for your business.
What Is Equipment Floater Insurance?
Equipment floater insurance, also known as contractors equipment insurance or inland marine coverage, protects eligible movable business equipment against covered theft, damage, and other insured losses.
Unlike traditional commercial property insurance, which generally focuses on property at specified locations, an equipment floater is designed for equipment that moves between different locations.
For example, an Ontario excavation contractor might operate several excavators, skid steers, and compactors across multiple construction sites. Instead of insuring each machine only at one fixed address, an equipment floater can provide coverage as the insured machinery moves between covered locations.
This type of coverage is often included in a broader contractor insurance program.
Important equipment insurance terms
Equipment Floater Insurance: Property insurance designed to protect portable machinery, tools, and other eligible movable equipment against covered physical loss or damage.
Contractors Equipment Insurance: A form of equipment floater coverage designed for machinery and equipment used by construction contractors and trades businesses.
Scheduled Equipment: Equipment individually identified in an insurance policy, usually by description, make, model, serial number, and insured value.
Blanket Coverage: Insurance that provides a combined coverage limit for a defined group of eligible tools or equipment, subject to policy conditions and individual item limits.
Actual Cash Value: The value of insured equipment at the time of loss, taking depreciation and other relevant valuation factors into account.
Replacement Cost Coverage: Coverage that may pay to replace damaged or stolen equipment with property of similar kind and quality without a depreciation deduction, subject to policy requirements.
What Does Equipment Floater Insurance Cover?
Equipment floater insurance commonly covers direct physical loss or damage to insured tools and machinery caused by events such as theft, fire, vandalism, and certain accidental damage.
Many Canadian equipment floater policies are written on a broad coverage basis, meaning they insure specified property against direct physical loss from external causes unless the policy excludes the cause of loss.
The exact coverage depends on the insurer, equipment type, endorsements, and policy conditions.
1. Theft of tools and construction equipment
Theft is one of the primary reasons contractors purchase equipment floater insurance.
Expensive equipment may be stored in:
• Construction sites
• Work trailers
• Commercial vehicles
• Storage yards
• Temporary warehouses
• Customer properties
An equipment floater can protect eligible machinery and tools stolen from covered locations.
Example: An electrical contractor has $25,000 worth of power tools, testing equipment, and specialized installation tools stolen from a secured job site trailer.
If the tools are insured and the theft meets the policy conditions, the equipment floater may pay toward their replacement, subject to the applicable deductible and valuation basis.
Theft coverage may have specific requirements for locked vehicles, secured trailers, storage arrangements, or evidence of forced entry.
2. Accidental physical damage
Heavy equipment operates in environments where accidental damage can occur.
A skid steer might overturn while working on uneven ground. A generator might be damaged when struck by another machine. Equipment might fall during loading or unloading.
Equipment floater insurance can cover these types of accidental physical losses when the cause is insured.
For some machinery, insurers apply special exclusions relating to overloading, lifting operations, underground work, or other hazardous activities.
3. Fire and vandalism
Commercial equipment can be exposed to fire, malicious damage, and vandalism while stored or used at job sites.
For example, vandals enter a construction site and damage several pieces of equipment.
An equipment floater may cover repair or replacement costs when the damage results from a covered event.
4. Equipment damaged during transportation
Contractors frequently transport machinery and tools between locations.
A piece of equipment may be damaged during a vehicle accident, while being loaded onto a trailer, or while secured for transportation.
Equipment floater insurance can provide coverage during transit within the policy's geographical limits.
However, damage to the transporting vehicle itself is generally handled separately through commercial auto insurance.
5. Damage caused by severe weather
Equipment stored outdoors may be exposed to windstorms, hail, and certain water damage events.
Whether a claim is covered depends on the specific weather event and policy wording. Flood, surface water, freezing, and other weather related losses may be excluded or subject to restrictions.
Equipment used near rivers, excavation sites, and areas with unstable ground can require additional underwriting consideration.
6. Rented and leased equipment
Many construction businesses rent equipment instead of purchasing every machine they need.
Rental agreements frequently make the contractor responsible for damage to the equipment while it is in their possession.
An equipment floater can include rented, leased, or borrowed equipment when the appropriate coverage is purchased.
Example: A general contractor rents a $90,000 scissor lift for a commercial construction project. The lift is damaged during a covered accident.
If the equipment floater includes sufficient rented equipment coverage and the loss meets the policy terms, the insurer may contribute toward the repair or replacement costs.
Do not assume rented equipment is automatically covered. Some policies provide only a small automatic limit, while others require rented equipment to be specifically declared.
What Types of Equipment Can Be Insured?
Equipment floater policies can be structured for a wide range of movable business assets.
|
Equipment category |
Common examples |
|---|---|
|
Heavy construction machinery |
Excavators, bulldozers, backhoes, loaders, skid steers |
|
Lifting equipment |
Forklifts, scissor lifts, boom lifts, certain cranes |
|
Portable tools |
Drills, saws, compressors, welders, testing tools |
|
Landscaping equipment |
Commercial mowers, aerators, compact tractors, stump grinders |
|
Construction support equipment |
Generators, pumps, light towers, compressors |
|
Surveying equipment |
Laser levels, total stations, specialized measuring equipment |
|
Temporary job site equipment |
Certain site trailers, scaffolding, and portable equipment |
|
Specialized business equipment |
Eligible portable machinery used in service and field operations |
The equipment must fall within the insured property description. Specialized equipment, vehicles requiring registration, and machinery used in higher risk operations may require separate arrangements.
Businesses with multiple projects should review their equipment insurance as part of their broader construction insurance coverage.
Where Does Equipment Floater Insurance Apply?
One of the main advantages of equipment floater insurance is that coverage can follow eligible equipment as it moves between locations.
Depending on the policy, insured equipment may be covered:
• At your primary business premises
• At temporary construction sites
• In storage yards and secured compounds
• Inside covered work trailers and vehicles
• During transportation between job sites
• At customer premises
• At temporary storage locations
Does equipment floater insurance cover equipment left in a truck overnight?
It can, but this is an important coverage condition to verify.
Some insurers impose restrictions on theft from unattended vehicles or require specific security measures.
For example, a contractor might leave several expensive tools inside a work van overnight. If the tools are stolen, the claim could depend on whether the vehicle was locked, where it was parked, and whether the policy contains an unattended vehicle exclusion.
Is equipment covered outside Ontario?
Many Canadian equipment floater policies provide coverage throughout Canada, and some extend into the continental United States.
Geographical restrictions vary by policy. Contractors working in the United States should confirm that their equipment floater includes the appropriate territory before transporting machinery across the border.
What Does Equipment Floater Insurance Not Cover?
An equipment floater provides valuable protection, but there are several important exclusions.
1. Normal wear and tear
Equipment gradually deteriorates through regular use.
Worn tracks, aging hydraulic components, corrosion, and general mechanical deterioration are usually considered maintenance expenses.
Equipment floater insurance is not designed to pay for routine servicing or replace components simply because they have reached the end of their useful life.
2. Mechanical or electrical breakdown
A common misconception is that equipment floater insurance automatically covers machinery that stops working.
Many standard equipment floater policies exclude mechanical breakdown, electrical failure, and internal defects.
For example, if an excavator's hydraulic pump fails because of an internal mechanical issue, the equipment floater may not respond.
Separate equipment breakdown coverage may be available for certain machinery and causes of loss.
Canadian contractors equipment policy forms commonly distinguish between covered external physical damage and excluded mechanical or electrical breakdown.
3. Unexplained disappearance
Theft and unexplained disappearance are not necessarily treated the same way.
If a contractor discovers that equipment is missing but cannot establish what happened, some policies may exclude the loss as mysterious disappearance.
Maintaining equipment inventories, serial numbers, and site records can help establish ownership and support a theft claim.
4. Equipment used outside approved operations
Specialized equipment may be subject to additional exclusions.
Examples can include:
• Operating machinery beyond its rated lifting capacity
• Certain crane and boom operations
• Equipment used underground or underwater
• Machinery operating on unstable ground
• Unapproved uses or locations
Review these restrictions carefully if your company performs excavation, demolition, lifting, or heavy civil construction.
5. Equipment regularly rented to other businesses
Equipment you rent from another company may be eligible for coverage.
However, equipment you own and regularly rent out to customers can require a different insurance arrangement.
Businesses operating equipment rental fleets should disclose those activities specifically.
6. Lost income and project delays
Suppose a contractor loses an excavator in a covered theft and cannot complete a project on time.
An equipment floater may cover the insured value of the excavator, but it does not automatically cover:
• Lost business revenue
• Contractual penalties
• Project delay damages
• Lost future contracts
• Additional labour costs
Some equipment policies offer rental reimbursement or other extensions that help pay for temporary replacement equipment after a covered loss.
These extensions should be reviewed separately.
Equipment Floater vs. Commercial Property Insurance vs. General Liability
Businesses often assume that their existing insurance already protects their equipment.
The following table explains the differences.
|
Insurance type |
Primary protection |
Example |
|---|---|---|
|
Equipment Floater |
Covered physical loss or damage to eligible movable tools and equipment |
An insured excavator is stolen from a job site |
|
Commercial Property |
Covered damage to business property at insured locations, subject to offsite extensions |
A fire damages machinery inside a warehouse |
|
Commercial General Liability |
Covered third party bodily injury and property damage liability |
A contractor accidentally damages a customer's building |
|
Commercial Auto |
Insured vehicles and related vehicle liability exposures |
A work truck is damaged in a collision |
|
Equipment Breakdown |
Specified sudden mechanical or electrical equipment failures |
An insured machine suffers a covered internal breakdown |
|
Installation Floater |
Materials and equipment awaiting or undergoing installation |
HVAC equipment is stolen before installation |
|
Builder's Risk |
Covered physical damage to construction work and eligible project property |
Fire damages a partially completed building |
Why commercial property insurance may not be enough
A conventional commercial property insurance policy typically focuses on property at designated locations.
Some policies include offsite equipment extensions, but those limits may be insufficient for businesses with significant equipment values across multiple job sites.
Why general liability does not replace equipment insurance
Commercial general liability insurance principally protects against covered claims involving injury or damage to third parties.
It generally does not pay to replace your own stolen tools or machinery.
What about tools stored in company vehicles?
Your commercial auto and fleet insurance can provide protection for insured vehicles, but it does not necessarily insure the tools and portable machinery being transported inside them.
An equipment floater may be needed to protect those assets.
Scheduled vs. Blanket Equipment Floater Coverage
Canadian businesses can often choose between scheduled equipment coverage, blanket coverage, or a combination of both.
Understanding these options is important when insuring machinery with significantly different values.
Scheduled equipment coverage
Under scheduled coverage, individual equipment items are identified in the insurance policy.
A schedule typically includes:
• Equipment description
• Manufacturer
• Model
• Year of manufacture
• Serial number
• Insured value
For example, an excavation company might schedule three excavators, two skid steers, and one loader separately.
This structure is commonly used for expensive machinery because each item can be identified and valued individually.
Blanket equipment coverage
Blanket coverage applies a combined limit to a defined category of eligible equipment.
This can be useful for contractors who own numerous smaller tools.
For example, an electrical contractor may carry blanket tools coverage for power drills, saws, testing equipment, and other portable tools.
Individual item limits and exclusions can still apply.
Which option is better?
For many contractors, a combination makes sense.
Expensive machinery can be scheduled individually, while smaller portable tools are insured under a blanket limit.
The right structure depends on the number of items, total equipment value, individual item restrictions, and how frequently your inventory changes.
Actual Cash Value vs. Replacement Cost: Why It Matters
One of the most important questions to ask when purchasing equipment floater insurance is how the insurer will value your equipment after a claim.
Two common valuation methods are actual cash value and replacement cost.
Actual cash value
Actual cash value generally accounts for depreciation.
Suppose a contractor purchased an excavator several years ago. A comparable new machine now costs substantially more than the depreciated value of the existing one.
If the excavator is stolen, an actual cash value settlement may be insufficient to purchase a brand new replacement.
Replacement cost
Replacement cost coverage can provide payment based on replacing insured equipment with a comparable item without deducting depreciation, subject to policy conditions.
However, insurers may limit replacement cost eligibility based on the equipment's age, condition, or type.
Some policies provide replacement cost for newer machinery while older equipment is insured on an actual cash value basis.
Before purchasing coverage, confirm the valuation basis for each major piece of machinery.
A policy with an adequate stated limit can still leave a significant replacement expense if the settlement is based on depreciated value.
How Much Equipment Floater Insurance Do You Need?
The amount of equipment floater insurance your business needs depends on the total value of the equipment you own and the property you are contractually responsible for.
Start by calculating the value of all eligible machinery and tools.
Then consider:
• Equipment owned by your business
• Machinery purchased through financing
• Leased equipment
• Equipment rented for temporary projects
• Tools carried by employees
• Specialized attachments and accessories
• Equipment stored at multiple job sites
Consider your maximum exposure at one location
Imagine a contractor who owns $500,000 worth of insured machinery.
Usually, that machinery is distributed across several job sites. However, the contractor sometimes stores multiple machines in one yard over the weekend.
A single fire, flood, or theft event could affect several pieces of equipment at once.
Review whether the policy has a maximum payment for any one occurrence or catastrophe and whether it is sufficient.
Remember new equipment purchases
Some policies provide temporary automatic coverage for newly acquired equipment, subject to limits and notification deadlines.
Do not assume newly purchased machinery is fully insured indefinitely.
Update your broker when you buy, lease, or finance new equipment.
How Much Does Equipment Floater Insurance Cost in Canada?
Equipment floater insurance premiums vary considerably because the equipment being insured, its value, and how it is used can differ substantially between businesses.
A plumbing contractor with $20,000 in portable tools presents a different risk from an excavation company operating $1 million in heavy machinery.
There is no reliable single annual premium that applies to every Canadian business.
Factors that affect equipment floater insurance premiums
|
Pricing factor |
Why insurers consider it |
|---|---|
|
Total equipment value |
Higher insured values increase the potential size of a loss |
|
Equipment type |
Heavy machinery, portable tools, and specialized equipment have different risks |
|
Equipment age |
Age can affect valuation, repairs, and replacement options |
|
Theft exposure |
Security arrangements and equipment portability influence theft risk |
|
Storage locations |
Secured yards and monitored buildings differ from exposed job sites |
|
Claims history |
Previous theft and damage claims can affect underwriting |
|
Deductible |
Higher deductibles may reduce premiums |
|
Geographical territory |
Coverage extending into additional jurisdictions may affect terms |
|
Rental equipment |
Rented and leased equipment may require additional limits and premium |
|
Security measures |
GPS tracking, immobilizers, fencing, and alarms can influence underwriting |
Can you lower your premium by choosing a higher deductible?
Potentially.
A higher deductible means the business absorbs more of each insured loss before the insurer pays.
This can reduce the premium, but the deductible should remain affordable if equipment is stolen or damaged.
For contractors with significant equipment values, it is worth comparing several deductible options against the actual premium savings.
What information is needed for an accurate quote?
Insurers typically request an equipment schedule containing the year, make, model, serial number, and value of each significant machine.
They may also ask where equipment is stored, how it is secured, where it operates, and whether the company has experienced prior losses.
Providing accurate information helps avoid delays and reduces the risk of discovering an equipment valuation problem after a claim.
Common Equipment Floater Insurance Claim Scenarios
The following examples illustrate how equipment floater coverage may respond to losses Canadian businesses experience.
Scenario 1: Excavator stolen from a construction site
An excavation contractor leaves a tracked excavator at a commercial construction site overnight.
The following morning, the machine is missing.
The contractor reports the theft to police and the insurer.
If the excavator is properly insured and the circumstances satisfy the policy requirements, the equipment floater may cover its insured value, subject to the deductible and valuation terms.
Scenario 2: Landscaping trailer broken into
A landscaping company stores mowers, blowers, and other equipment inside a trailer.
Someone breaks into the trailer and steals several machines.
Blanket or scheduled equipment coverage may respond if the stolen property is insured and the applicable theft conditions are satisfied.
Scenario 3: Equipment overturned during operation
A construction contractor is operating a skid steer when it overturns on uneven ground.
The machine suffers substantial damage.
An equipment floater may respond when overturn is a covered cause of loss and no applicable exclusion prevents coverage.
Scenario 4: Rented machinery damaged at a job site
A contractor rents a compact loader for a short construction project.
During the rental period, the loader is damaged in an insured accident.
If the contractor's policy includes rented equipment coverage with adequate limits, it may help pay the covered damage.
The rental agreement should also be reviewed to establish the contractor's financial responsibilities.
Scenario 5: Compressor fails internally
A contractor's compressor stops working because an internal component wears out.
A standard equipment floater would not ordinarily cover this type of mechanical deterioration.
Separate equipment breakdown coverage may be relevant if available for the equipment and cause of loss.
How to Reduce Equipment Theft and Insurance Costs
Insurers consider how equipment is secured, stored, and maintained.
Businesses that document practical loss prevention measures may have better underwriting options.
Improve equipment security
• Install GPS tracking on high value machinery.
• Use immobilizers and appropriate locking devices.
• Store machinery inside fenced and monitored yards.
• Secure trailers and portable tool containers.
• Use adequate lighting and surveillance cameras.
• Limit access to storage locations.
• Avoid leaving expensive portable equipment in unattended vehicles where possible.
Maintain an equipment inventory
Keep a current register containing equipment descriptions, serial numbers, photographs, purchase records, and insured values.
Update the register when equipment is purchased, sold, rented, or transferred.
A current inventory can make it easier to establish ownership and support a claim.
Maintain machinery properly
Follow manufacturer maintenance schedules and document inspections.
Routine maintenance can reduce unexpected failures and help demonstrate responsible equipment management.
Review your policy annually
As your business grows, the equipment you own and use may change significantly.
Review limits, schedules, rental equipment requirements, and valuations at every renewal.
Common Equipment Floater Insurance Mistakes
These mistakes can create unexpected financial losses.
Insuring only equipment at your business address
Many contractors spend most of their working hours away from their premises.
Confirm that coverage applies at the locations where equipment is actually used and stored.
Forgetting to insure attachments
Excavator buckets, specialized cutting heads, hydraulic attachments, and other accessories can have significant replacement values.
Confirm whether they are included with the main machine or must be declared separately.
Assuming rental equipment is automatically insured
Rental agreements can impose responsibility for substantial repair or replacement costs.
Verify the coverage and rental equipment limits before accepting delivery.
Not updating equipment schedules
If a valuable machine is not listed under a scheduled equipment policy, coverage may be unavailable or restricted.
Choosing insufficient blanket limits
A blanket tools limit may seem adequate until a trailer containing an entire crew's equipment is stolen.
Review both the total limit and individual item restrictions.
Confusing an equipment floater with equipment breakdown insurance
Physical damage caused by an insured external event and internal machinery breakdown can have different insurance treatments.
Both exposures should be evaluated.
Ignoring policy security conditions
A theft claim may be affected by requirements relating to unattended vehicles, storage security, locks, or other safeguards.
Review these conditions before a loss occurs.
Quick Equipment Floater Insurance Checklist
Before purchasing or renewing equipment floater insurance, confirm:
• All significant equipment is scheduled or included under appropriate blanket coverage.
• The insured values reflect the applicable replacement cost or actual cash value basis.
• Equipment is covered at job sites, in storage, and during transportation.
• Theft coverage includes the locations and storage arrangements your business uses.
• Rented and leased equipment is included where required.
• Attachments and specialized accessories are insured.
• Deductibles and individual item limits are understood.
• Newly acquired equipment provisions are sufficient.
• Rental reimbursement is considered for machinery critical to ongoing operations.
• Any relevant mechanical breakdown exclusions have been reviewed.
Frequently Asked Questions About Equipment Floater Insurance in Canada
Is equipment floater insurance mandatory in Ontario?
Equipment floater insurance is not universally required by Ontario law for every contractor. However, lenders, equipment leasing companies, general contractors, and commercial clients may require businesses to maintain appropriate equipment insurance.
Even when it is not contractually required, coverage can protect businesses against substantial equipment replacement expenses.
Does equipment floater insurance cover stolen tools?
Yes, theft of insured tools is a common coverage under equipment floater policies. Coverage depends on the policy limits, insured property description, security conditions, and circumstances of the theft.
Does equipment floater insurance cover rented equipment?
It can. Some policies provide limited automatic coverage for rented equipment, while others require a specific extension or scheduled coverage. Always verify the limit before signing a rental agreement.
Does equipment floater insurance cover machinery breakdown?
Generally, standard equipment floaters focus on covered physical loss or damage rather than internal mechanical or electrical breakdown. Separate equipment breakdown coverage may be needed.
Does commercial general liability insurance cover stolen equipment?
Generally, no. Commercial general liability primarily covers specified third party liability claims. Equipment floater insurance is intended to protect your own insured movable equipment.
Can equipment floater insurance cover tools left in a vehicle?
Yes, depending on the policy. Theft from unattended vehicles may be subject to restrictions, security requirements, or exclusions. Confirm the wording before relying on the coverage.
Is equipment floater insurance the same as inland marine insurance?
Equipment floater insurance is a type of inland marine insurance. The term inland marine refers to a category of property coverage that includes various forms of movable property and property in transit.
Not every inland marine policy is an equipment floater.
Does equipment floater insurance cover materials being installed?
Not necessarily. Materials intended to become part of a construction project may require installation floater or builder's risk insurance.
An equipment floater typically focuses on tools and machinery used to perform the work.
Can I insure both small tools and heavy equipment under one policy?
Often, yes. Many insurers can combine scheduled coverage for expensive machinery with blanket coverage for smaller tools.
The available structure depends on the insurer and the business's equipment inventory.
Request an Equipment Floater Insurance Quote or Book a Meeting
Your equipment is an important part of your business. A single theft or major equipment loss can affect your cash flow, disrupt operations, and delay projects.
Boardwalk Insurance helps contractors, construction companies, landscapers, excavation businesses, and other commercial operations across Ontario arrange insurance for their tools, machinery, and equipment.
Whether you are purchasing a new excavator, adding rented machinery, or reviewing an existing insurance policy, our commercial insurance team can help you compare available coverage options and understand the differences in limits, deductibles, and equipment valuation.
Request an Equipment Floater Insurance Quote to discuss the equipment your business needs to protect.
What We Need From You
• Your legal business name and primary operating locations
• Description of your trade, projects, and equipment operations
• Equipment list including year, make, model, serial number, and estimated value
• Details of any rented, leased, or financed machinery
• Where your equipment is stored and the security measures in place
• Current insurance policies, renewal date, and preferred coverage limits
• Previous equipment theft, damage, or insurance claims history
