Two Policies, Two Different Jobs
Inland marine and builders risk both protect physical property on construction sites, but they cover completely different things. Inland marine covers your tools and equipment. Builders risk covers the structure being built. Mixing them up or assuming one covers both is a mistake we see contractors make all the time.
What Inland Marine Covers
Inland marine insurance protects your portable tools, equipment, and materials while they are in transit, at a job site, or stored at your shop. The name comes from old maritime insurance that covered goods shipped inland from ports. Today it covers anything movable.
What is covered:
- Power tools (saws, drills, compressors, generators)
- Hand tools
- Scaffolding and ladders
- Surveying and testing equipment
- Leased or rented equipment
- Materials in transit to a job site
- Mobile equipment (welders, air compressors on trailers)
Common claims:
- $18,000 in power tools stolen from a locked job site trailer
- Generator destroyed when it fell off a truck during transport
- Laser levels and surveying equipment damaged by water intrusion
- $12,000 in copper fittings stolen from a plumbing contractor's van
What is not covered:
- Vehicles themselves (that is commercial auto)
- Buildings or structures under construction (that is builders risk)
- Equipment breakdown from wear and tear
- Property at a permanent location (that is commercial property insurance)
What Builders Risk Covers
Builders risk covers the structure itself during construction. It protects the building, permanently installed materials, and fixtures from the time construction begins until the project is completed and the owner takes possession.
What is covered:
- The building frame, foundation, and structure
- Installed materials (drywall, electrical, plumbing, HVAC)
- Building materials stored on site awaiting installation
- Fixtures and equipment that become part of the building
- Temporary structures (fencing, scaffolding, site offices)
- Soft costs (architect fees, permit fees, loan interest during delays)
Common claims:
- Fire destroys a partially framed custom home. Loss: $280,000
- Windstorm damages newly installed roofing and siding. Loss: $45,000
- Theft of installed copper pipe and HVAC equipment overnight. Loss: $32,000
- Water damage from a burst pipe during a cold snap. Loss: $60,000
- Vandalism to interior finishes on an unoccupied renovation. Loss: $22,000
What is not covered:
- Contractor's portable tools and equipment (that is inland marine)
- Damage caused by faulty workmanship (that is a GL or warranty issue)
- Land value
- Existing structures not part of the current project (unless endorsed)
Side-by-Side Comparison
| Feature | Inland Marine | Builders Risk | |---------|--------------|---------------| | What it covers | Your tools and equipment | The building under construction | | Who buys it | The contractor | Varies (owner, GC, or contractor) | | Duration | Annual policy, ongoing | Per project, until completion | | Cost basis | Value of equipment | Total project value | | Typical cost | $300-$1,500/year | 1-5% of project value | | Covers theft | Yes | Yes (materials and installed items) | | Covers transit | Yes | Limited | | Covers fire | Yes (to equipment) | Yes (to structure) |
The Gap Between Them
Here is where contractors get caught. Your crew is working on a $400,000 home renovation. You have $35,000 in tools on site and $50,000 in materials stored in the garage waiting to be installed.
- If someone steals your tools: inland marine covers it
- If someone steals the stored materials: builders risk covers it (materials at the job site for the project)
- If a fire destroys the partially completed renovation: builders risk covers the structure
- If the fire also destroys your tools: inland marine covers your tools
Neither policy covers the other's territory. You need both.
Who Buys Builders Risk
On commercial projects, the contract usually specifies who purchases builders risk. Often it is the property owner or the general contractor. On residential custom homes where the contractor is the GC, the contractor typically buys it. Some construction lenders require builders risk as a condition of funding.
Always read the contract. If it says the contractor is responsible for builders risk and you do not have it, any property loss during construction comes directly out of your pocket.
The Bottom Line
If you own tools, buy inland marine. If you build structures, make sure builders risk is in place on every project. They are not interchangeable and having only one leaves a major gap.
Call (949) 200-7171 and we will review both coverages for your operation. We can typically bundle inland marine with your GL and auto package for a discount.