Property Insurance for Contractors
Coverage for Buildings, Equipment, and Business Property
Property insurance is designed to help protect the physical assets your business relies on, such as buildings, equipment, and business contents, against certain covered causes of loss.
For contractors, property-related losses can be significant. Fire, wind, theft, or vandalism at a shop or storage location can disrupt operations if coverage is not structured appropriately.
At Contractor Insurance Pro, we work with contractors to structure property coverage that aligns with their operations and risk profile.
What Property Insurance Is Intended to Cover
Property insurance generally applies to owned or leased locations and the business property located there. It does not typically apply to active jobsites or property in transit.
Coverage may apply to:
- Office buildings, shops, and warehouses
- Storage yards and fixed locations
- Equipment stored at insured locations
- Inventory, materials, and supplies
- Furniture, computers, and other business contents
Coverage structure and eligibility vary based on ownership, lease terms, and carrier underwriting guidelines.
Covered Causes of Loss
Depending on the policy form and endorsements, property insurance may provide coverage for losses caused by events such as:
- Fire and smoke
- Wind and hail
- Theft and vandalism
- Certain types of water damage
- Explosion
- Limited collapse causes
- Vehicle or aircraft impact
Common Property Insurance Exclusions
Property insurance policies typically contain exclusions and limitations. While these vary by carrier and policy form, commonly excluded or limited items may include:
- Wear and tear or gradual deterioration
- Mechanical breakdown
- Mold or fungus (often limited)
- Faulty workmanship or improper installation
- Flood and earth movement, unless specifically added
Because exclusions and endorsements differ by policy, coverage should be reviewed carefully to understand how these apply to a specific operation.
Replacement Cost vs. Actual Cash Value
Property policies may settle claims using one of two valuation methods:
Replacement Cost
- Based on the cost to repair or replace with materials of like kind and quality
- Does not deduct depreciation, subject to policy terms
Actual Cash Value
- Replacement cost minus depreciation
- Typically results in lower claim payments
Which valuation applies depends on the policy form selected, underwriting requirements, and premium considerations. Valuation should be reviewed carefully, as it can significantly impact claim outcomes.
Building Coverage vs. Business Personal Property
Building Coverage
- Applies when the insured owns the structure
- Typically includes walls, roof, and permanently installed fixtures
- Adequate valuation is important to avoid potential penalties at claim time
Business Personal Property
- Covers business-owned contents inside the building
- Includes equipment, inventory, furniture, and supplies
- Limits should be reviewed periodically as operations change
Common Coverage Gaps We Commonly See
During policy reviews, we often identify issues such as:
- Building values that do not reflect current replacement costs
- Property insured on an actual cash value basis without clear intent
- Incomplete coverage for contents or inventory
- Construction type or occupancy misclassification
- Seasonal inventory fluctuations not reflected in limits
Not every contractor faces these issues, but they are common enough to warrant review.
How Property Insurance Fits Into a Broader Program
Property insurance works alongside other policies, including:
- Inland Marine (tools and equipment away from fixed locations)
- Builders Risk (structures under construction)
- Business Income or Extra Expense coverage
When these policies are not coordinated, coverage gaps can occur.
Who Typically Needs Property Insurance
Property insurance is commonly carried by contractors who:
- Own or lease office, shop, or warehouse space
- Store tools, equipment, or materials at fixed locations
- Maintain inventory or business contents
- Would be financially impacted by a property loss
Even contractors who primarily work in the field may have meaningful property exposure.
Frequently Asked Questions About Contractors Property Insurance
Is property insurance required for contractors?
Property insurance is not typically required by law. However, it may be required by a lender, landlord, or lease agreement if you own or lease a building. Even when not required, many contractors carry property insurance to protect buildings, contents, and equipment stored at fixed locations.
Does property insurance cover tools and equipment?
Property insurance may cover tools and equipment while they are located at an insured premises, subject to policy terms and limits.
Tools and equipment taken off-site, transported, or used at jobsites are often better addressed through inland marine or contractor’s equipment coverage, which is usually written separately.
Is property insurance the same as builders risk?
No. Property insurance is generally intended to cover existing buildings and contents at fixed locations.
Builders risk insurance is designed to cover structures under construction or renovation and typically applies only for the duration of a specific project.
Does property insurance cover damage from storms or wind?
Property insurance may provide coverage for storm-related damage such as wind or hail, depending on the policy form, location, and endorsements. Some policies include separate wind or hail deductibles, and coverage availability can vary by region and carrier.
Is flood damage covered under a property policy?
Flood damage is typically excluded from standard property insurance policies. Coverage for flood exposure is usually written through a separate flood insurance policy or endorsement, if available.
What’s the difference between building coverage and business personal property?
Building coverage generally applies to the structure itself when owned by the insured.
Business personal property coverage applies to business-owned contents inside the building, such as equipment, inventory, furniture, and supplies.
Limits and valuation methods differ for each and should be reviewed separately.
Does property insurance include business income coverage?
Business income (sometimes called business interruption) coverage may be available in connection with a property policy, but it is not automatic. Availability, limits, waiting periods, and applicability vary by carrier and policy form. Coverage should be reviewed carefully to determine whether it aligns with a contractor’s operations.
How often should property values be reviewed?
Property values should be reviewed periodically, especially after:
Renovations or building improvements
Equipment or inventory increases
Significant changes in construction costs
Business expansion or relocation
Outdated values can impact claim settlements if a loss occurs.
Can leased buildings be insured under a property policy?
Yes. Contractors who lease space may still need property insurance for business personal property and, in some cases, tenant improvements or betterments. Coverage responsibilities often depend on the lease agreement and should be reviewed carefully.
Our Approach
We work with contractors to:
- Review property values and coverage structure
- Identify potential gaps or inconsistencies
- Coordinate property coverage with other policies
- Adjust coverage as operations evolve
Coverage needs vary by business, location, and carrier appetite.
Request a Property Coverage Review
If you currently carry property insurance, we can review it for valuation accuracy and alignment with your operations.
A coverage review does not guarantee coverage for any specific loss but can help identify potential issues before a claim occurs.
Coverage availability, terms, and conditions vary by insurer and policy form. All coverage is subject to underwriting approval and the actual policy language.
