My equipment is damaged now. What are the hidden insurance costs?
New Jersey Contractor Surety Bonds
March 26, 2025By Adam Puharic, Puharic and Associates, Inc.
As part of your business insurance program, you’ve been paying for a policy sometimes known as “Inland Marine” or “Equipment Floater” or “Scheduled Equipment” policy. All of these terms refer to a form of insurance that indemnifies against losses to tools and equipment owned by or rented by you/your business. There are important nuances to this coverage that you need to discuss with your agent in order to get the appropriate type of protection from this complex policy form. This article seeks to help you understand the coverages, and specific endorsements that may better protect your unique risks.
The term “inland marine” refers to the policy form type used to determine coverages. Like it sounds, inland marine policies have their historical beginnings on the high seas, insuring cargo moving from place to place. The concept behind their policy form is a difference in condition between when the cargo started its journey versus when it arrives or fails to arrive. This typically means that all types of losses from fires to flood to theft to lightning and wind are contemplated in the coverage. So, this is why you have an inland marine policy, whether or not your business has anything to do with cargo, boats or marine transport.
An important distinction you need to make for your coverage is whether to insure on a replacement cost basis or actual cash value. For some of our businesses, tools depreciate rapidly and technology changes over time so that a tool that was so valuable and important to your business one year is either replaced with a different technology, or less of a priority to you over time. In these situations, actual cash value – or a depreciation schedule for items – is an acceptable policy form that balances coverage with premium efficiency. For other equipment, the prices are rising dramatically over the past, and the new tariff rules may have some short-term impacts that need to be accounted for. It may be very important to ask your agent for replacement cost basis – getting reimbursement for the actual new price to replace that item. Now more than ever, this may be essential coverage for your business.
Another necessary endorsement for many businesses will be business interruption and/or related loss of business income for the damaged tools. In the past, loss of equipment or tools might result in a crew shifting responsibilities to another type of work for a day or two. Now, specialized tools, robotic assisted equipment, drones, GPS guidance systems that undergo a loss can result in teams of workers being effectively unemployed for a time. Or worse, specialized equipment damaged in a loss can sometimes NOT be replaced for ongoing work, resulting in loss of income that can’t be made up with other workers. Business Income/interruption coverage is not always automatically included in the inland marine form. Please be sure to ask your agent about this coverage.
Repair/replacement provisions are also important to understand and discuss with your agent. Many inland marine forms mandate that the insurer make the decision as to whether an item can be repaired or must be replaced. A misunderstanding can result in the client/policy holder feeling cheated or misrepresented by their carrier after a loss. Make sure to ask your agent how the inland marine form handles repair/replace questions.
You’ve paid for this inland marine coverage for years. Please take a moment to understand some of these options available to you and have that conversation with your agent today!
Puharic and Associates, Inc.is a professional risk management and insurance firm in Manasquan NJ. Puharic focuses on concierge-style risk management to provide 360-degree protection for business owners by combining all insurance coverages under one roof. By creating a 3-dimensional risk profile of the business owners’ risks, from cyber to employee benefits to personal risks, Puharic and Associates helps business owners grow by creating a step-by-step plan for their protection that evolves with them. For more information, please visit www.puharicassociates.com