How to protect your tools and equipment
Earlier this year, one of our insured home inspectors sent his radon monitor in for calibration. When the servicing was complete, the manufacturer shipped the monitor back to the home inspector. But, when the inspector returned home, the radon monitor was nowhere to be found.
The inspector put in a claim with the radon monitor manufacturer, who subsequently put in a claim with the shipping company. Both the manufacturer and the shipping company denied any liability or coverage for the loss. So, the home inspector filed a police report with his county’s Sheriff’s Department and contacted us, his insurance provider, to see if we could cover the lost radon monitor.
What is equipment coverage?
Formally known as inland marine coverage or a commercial property floater, equipment coverage insures your inspection tools and equipment. Unlike standard property insurance, inland marine coverage protects your tools and equipment regardless of their location. This is important in the home inspection industry since, rather than housing your tools and equipment in an office, you usually have your materials in your work vehicle or on inspection sites.
In most cases, equipment coverage for home inspectors reimburses you for the actual cash value (not the cost of the items brand-new) of your stolen or damaged equipment or tools. Oftentimes, coverage extends to not just items you own but items you lease or rent.
Most home inspection tools and equipment are eligible for inland marine insurance endorsements. Popular items home inspectors insure include:
- Cameras, including infrared cameras, sewer scopes, and drones
- Testers, including electrical testers, radon monitors, and moisture meters
- Toolkits and ladders
- Mobile office equipment, including laptops and tablets
What types of claims are typically covered?
Examples of typical inland marine insurance claims include:
- Someone burglarizes your locked inspection vehicle and swipes your drone.
- As you’re taking inspection photos, you trip and drop your digital camera, breaking the lens.
- While inspecting the roof, someone steals your infrared camera, which you left at the base of your ladder.
- Someone takes your leased radon monitor from where you left it overnight on the inspection site.
- While taking off, you lose control of your drone and crash it to the ground, damaging the wings and internal computer.
Many equipment insurance policies cover physical loss or damage caused by perils, such as falling objects, fire, lightening, sink hole collapse, vandalism, vehicles, and water damage. To see what perils are and are not covered, review the Conditions and Definitions sections of your inland marine policy.
How does equipment coverage work?
Typically, equipment coverage is subject to your “schedule of coverages,” which describes the property you’d like the insurance company to insure. Most insurance companies require that inspectors provide property descriptions—including the make, model, and serial number—for any items worth more than a certain amount.
Here at InspectorPro, we require property descriptions for any items worth $500 or more. For any items worth less than $500, InspectorPro insureds may still cover the property as “miscellaneous tools” without providing make, model, and serial information for each tool. The only caveat is that miscellaneous tools cannot exceed $2,500 in total value. Find an example of a schedule of coverages below:
Note that most insurance providers have a coinsurance requirement of 80 percent or more. What this means is that home inspectors need to carry equipment coverage for at least 80 percent of the item’s value.
For example, say that Dell computer in the schedule above is actually worth $1,000 but, because the inspector’s policy only covers $10,000 in equipment, the inspector decides to only insure the computer for $750. The home inspector would be insuring the computer for less than 80 percent of its value, thus jeopardizing his coinsurance requirement. If the computer was stolen, and the claims adjuster found that the computer was worth $1,000, the insurance company could subtract how much the inspector underinsured from the limit on the schedule of coverages as illustrated below.
If an insurance provider says that a schedule of tools or items isn’t necessary to receive coverage, we strongly suggest submitting one to your provider anyway. Even if a schedule of coverages isn’t required to purchase coverage, schedules are required to determine coverage eligibility. If you don’t have a detailed list of your tools and equipment available, that carrier may deny your claim.
What happens when I have a claim?
When you have a claim, you will submit loss details to your insurance provider’s claims team in writing within a certain time frame. (Here at InspectorPro, you must report stolen property to us in writing promptly or as soon as possible.) What details your insurance company needs will vary based on the terms of your policy. Here at InspectorPro, the information we request to process an equipment coverage claim include:
- Date and time of theft or notice of theft
- Location of property at time of loss
- Copy of the police report, in case of theft
- List of property stolen
- Photos of property stolen, if available
- Description of circumstances which led to loss
Note that home inspectors must provide all of the information above within 60 days after we request proof of loss.
Based on the loss information and policy terms, claims adjusters will determine coverage eligibility.
Note that many insurance companies do not cover theft from an unattended vehicle. The exception: You securely locked the vehicle and fully closed windows, and there is visible evidence of forced entry. According to most inland marine endorsements, you must take all reasonable steps to protect covered property from loss. Securing your vehicle is one of the ways in which you can reasonably protect your property.
Once the claims team determines coverage eligibility, they’ll determine the covered property’s actual cash value at time of loss. To determine the actual cash value, your claims adjuster will research the most recent sales price of the item. They may also factor in depreciation, or reduction in value of the asset overtime due to natural wear and tear.
How did the case of the stolen radon monitor resolve?
What about the home inspector at the beginning of this article? In the case of the stolen radon monitor, the home inspector had purchased equipment coverage with us. Typically, equipment coverage does not cover missing property where the only proof of loss is unexplained or mysterious disappearance of covered property, or instances in which there is no physical evidence to show what happened to the covered property. However, according to the terms of our policy, this exclusion of missing property does not apply to covered property in the custody of a carrier for hire—in this case, the shipping company. So, with the inland marine endorsement, and with the theft meeting policy terms, the inspector had coverage.
His claims adjuster found that the manufacturer’s website had sold the radon monitor just over a year ago. The price: $800. The adjuster utilized the value of $800 without additional depreciation. So, the covered loss was $800 minus their deductible of $250 for a covered payable loss of $550.
How do I apply?
To apply for equipment coverage, contact your home inspection insurance provider. Many providers have relationships with carriers that offer property floaters as endorsements, or add-ons, to your existing coverage. By adding equipment coverage to your existing policy, you can continue to work with the same agent, provider, and carrier to safeguard your inspection business.
Like most endorsements, inland marine coverage in the home inspection industry usually costs a flat annual fee. Here at InspectorPro, we offer $10,000 in equipment coverage for $200 annually with a deductible of $250. Contact your InspectorPro insurance broker to add equipment coverage to your policy at renewal or even mid-policy period.