Does business insurance cover theft?

What this means for you

• Decide which policy you are asking. Business insurance is a bundle, and theft is a property question. General liability is the policy most businesses hold first and it answers for what you owe other people after you hurt them or damage their property. Your own stolen tools are not in it, and a claim filed on it will be declined on the first page. The policy to open is the commercial property policy, or the property section of a business owners policy, which is a package that puts property and general liability on one form.
• Measure from the address on the declarations page. The property form insures your equipment "in or on" the building at that address, or in the open or in a vehicle within 100 feet of it. A locked shop broken into overnight is the loss the form was written for, and theft is a covered cause under the special form because nothing in it excludes an outsider taking your property. Move the same tools to a customer’s driveway and the form has to reach them through an extension.
• The truck is the gap, not the exception. The off-premises extension pays up to $10,000 for property temporarily at a place you do not own, and then says in the next clause that it does not apply to property in or on a vehicle. The transit extension does apply to a vehicle, pays up to $5,000, and for theft requires forced entry into a locked body or compartment with visible marks. Tools lifted from an open bed, from an unlocked cab, or from a trailer that was never locked fall between the two. And builders’ tools and equipment more than 100 feet from your premises are covered only for the specified causes of loss, a list that names fire and windstorm and vandalism and does not name theft. For a contractor, that limitation alone removes most of the working day from the property policy.
• Inland marine is the policy written for property that moves. The name is a leftover from marine insurers extending cargo coverage onto land, and what it means for a trade is a contractors equipment floater, a policy that follows the equipment wherever it is, on a site, in the truck, or in a rented storage unit, and covers theft without asking how far from your address it happened. Large items are scheduled, meaning listed with a value, and hand tools are usually covered as a blanket amount. The two choices that change the price are whether a stolen item is paid at replacement cost or at what it was worth used, and the deductible per occurrence, which matters more than the limit when a truck is cleaned out one night at a time.
• Keep the evidence, because the form asks for it. Both extensions and the transit clause turn on physical proof, and the special form refuses any loss where the only evidence is a shortage on taking inventory. Photograph the broken window or cut padlock before you clean up, file the police report the same day, and keep a list of serial numbers off the site. An inland marine claim goes the same way; a schedule with serial numbers is a claim that pays in weeks, and a memory of what was in the truck is one that gets negotiated.

Related questions

Does general liability cover theft?

No. General liability pays what you become legally obligated to pay for injury or property damage you cause to someone else. It has no section that replaces your own property, and standard forms also exclude damage to property in your care, custody or control, so a customer’s belongings stolen from your truck are not in it either. The policy that pays for your stolen tools is a property policy or an inland marine policy. Where general liability does come in is the other direction, when a break-in at your shop injures a neighbor or a stolen truck of yours damages someone’s fence, and both of those are claims by other people.

What general liability insurance covers

Is there such a thing as tool theft insurance?

Yes, under a different name. Insurers sell it as inland marine, and for a trade as a contractors equipment floater or a tools and equipment policy. It insures the equipment itself against theft and damage wherever it is, without the 100-foot rule, the vehicle exclusion or the forced-entry requirement in the property form. Hand tools go on as a blanket amount and anything worth scheduling goes on by serial number. Ask whether the policy pays replacement cost or actual cash value, because a five-year-old set of tools has a used value well below what it costs to work tomorrow.

Inland marine and contractors equipment insurance

Will homeowners insurance cover stolen tools?

For a hobbyist, within the personal property limit. For a trade, up to $2,500 at home and $1,500 away from it, because the homeowners form caps property "used primarily for ‘business’ purposes" at those two figures. A truck of tools stolen from your driveway is over the cap before the second drill, and tools stolen from a job site are on the $1,500 side. The homeowners form also defines a business by income, so a carrier that learns the tools earn a living can look at the whole policy, not only the claim. If the tools are how you get paid, they belong on a business policy.

Does a business owners policy cover theft?

Its property section does, at the address on the policy and subject to its own limits for property elsewhere and in transit. A business owners policy is a package that puts property and general liability on one form for smaller businesses, and its property section is built on the same ideas as the commercial property form quoted on this page, including the distinction between property at your premises and property in a vehicle. The off-premises and transit figures on a BOP are printed in the form and can differ from the commercial property ones, so read them from your policy rather than from this page. A contractor whose equipment works away from the shop usually needs an equipment floater added or bought alongside it.

What a business owners policy includes

What if the tools were stolen with the truck?

Two claims on two policies. Commercial auto physical damage coverage pays for the truck, and the ladder rack and toolbox bolted to it are usually treated as part of the vehicle. The loose tools inside are contents, which an auto policy does not insure, so they go back to the property or inland marine question above. If the truck is recovered empty a week later, the auto claim shrinks to the damage and the tools claim is unchanged. Tell both carriers on day one so neither one waits for the other.

Commercial auto insurance

Does the policy pay if an employee stole it?

Not the property policy. The special form excludes any dishonest or criminal act, including theft, by you, your partners, your employees, including temporary and leased workers, and anyone you entrust the property to, whether they act alone or with an outsider. Employee theft is insured under a separate crime policy, sometimes called employee dishonesty coverage, and it is priced on how much one person could take before anyone noticed. If a foreman with a key to the yard is the risk you are thinking of, that is the policy to ask about.

Commercial property insurance

Does insurance cover materials stolen from a job site?

Under a standard property policy, no. The special form will not pay for theft of building materials and supplies not yet attached to the structure, which describes every pallet of lumber and every coil of wire on a site the night before it goes in. A builders risk policy, which insures a structure while it is being built, is the policy that usually covers materials on site and in transit to it, and the general contractor’s builders risk may or may not extend to a subcontractor’s materials. Ask before delivery, not after, and never store more on site than the policy you actually hold will replace.