For an HVAC contractor, electrician, or plumber, tools aren’t just equipment they’re how you make money. Imagine walking out tomorrow morning and discovering thousands of dollars of tools and equipment have been stolen. You file an insurance claim expecting enough money to replace everything, only to discover your policy may pay based on the depreciated value of those tools.
That’s the difference between Replacement Cost and Actual Cash Value (ACV). Replacement Cost coverage generally looks at the cost to replace covered property with new property of like kind and quality, subject to the policy terms and limits. Actual Cash Value typically takes depreciation into account. That five-year-old piece of equipment may still work perfectly and be essential to your business, but its depreciated value could be considerably less than what you’ll spend buying a new one.
Contractors should also make sure their tools are insured where they’re actually being used and stored. Tools may spend more time in vans, trailers, jobsites, and temporary locations than they do at the business address. A standard property policy may not provide the protection you expect once equipment leaves your premises. That’s where contractors equipment, inland marine, or tools and equipment coverage can become especially important.
If you’re a contractor, take a few minutes and estimate what it would cost to replace everything in your truck or trailer tomorrow morning at today’s prices. Then compare that number with your insurance policy. If you haven’t reviewed your tools and equipment coverage recently, give us a call. We’ll help you determine what you have, how losses are valued, and whether your current limit is enough.
Stay Tuned For Other Great Reads In This Month’s Newsletter
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