Contractors' Equipment and Coinsurance
Contractors’ equipment may be insured either on a scheduled basis, meaning listing an amount of insurance for each item, or on a blanket basis, with a larger amount shown for all tools and equipment. With either method, it’s important to realize that the insurance policy almost always requires the contractor to insure the equipment for a minimum amount (80%, 90% or 100% depending on the insurance carrier). If the contractors’ equipment policy is written on a replacement cost basis with a 90% insurance-to-value requirement, then all equipment must be insured to 90% of what it would cost to replace it. Failure to do so can result in a reduced claim payment, most commonly referred to as a coinsurance penalty. Please talk to your agent about adequate insurance limits on your equipment. He or she will advise you about the proper amount of insurance required to avoid any unpleasant surprises at the time of a loss.