Does Property Insurance Cover Inventory and Equipment?
Learn how commercial property policies protect the physical tools and stock that power your business
Inventory and equipment often represent the lifeblood of a business. Whether you’re running a retail store, restaurant, clinic, or creative studio, the value of your stock and tools can be substantial. If fire, theft, or water damage strikes, having insurance that replaces these assets can mean the difference between recovery and shutdown.
This becomes especially important if your operations rely on expensive gear or if your inventory turns over quickly. You might think about this the next time you stock up ahead of a busy season, purchase new machinery, or move into a larger space.
What Inventory and Equipment Coverage Includes
Most commercial property insurance policies include protection for two major categories:
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Business equipment and tools
This includes everything from computers, kitchen appliances, and point-of-sale systems to printing presses, dental chairs, and manufacturing machines. As long as they’re used for the day-to-day function of the business and located at the insured premises, they’re typically covered for events like fire, vandalism, theft, or sudden water damage. -
Merchandise and inventory
This refers to the goods you store, sell, or use in production—such as clothing, electronics, packaged food, raw materials, or finished products. These items are usually covered for their cost or wholesale value if damaged or destroyed by a covered event.
| Asset Type | Covered by Property Insurance? | Typical Conditions |
|---|---|---|
| Manufacturing equipment | Yes | Must be listed on your asset schedule |
| Retail inventory | Yes | Insured at replacement or wholesale cost |
| Personal items of employees | No | Separate rider or liability policy may be required |
| Mobile equipment (off-site) | Sometimes | Often requires an equipment floater |
Tip: Keep an up-to-date inventory list with serial numbers, purchase dates, and estimated values. This documentation speeds up claims and helps ensure you’re fully reimbursed.
When Coverage Might Fall Short
There are situations where standard commercial property insurance won’t fully protect your inventory or equipment. These include:
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Losses during transportation: Items damaged while being delivered or moved may not be covered unless you have inland marine or transit insurance.
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Stock stored off-site: Inventory kept in a warehouse, vehicle, or satellite location may need to be listed separately or covered under an extension.
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Normal wear and tear: Insurance does not cover equipment that breaks down due to age, misuse, or poor maintenance.
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Unreported upgrades or purchases: If you recently added new gear but haven’t updated your policy, those assets may not be covered until declared.
Note: You can usually add riders or endorsements to expand your coverage for tools, equipment in transit, or seasonal inventory spikes.
Protecting What Keeps You Running
A loss of inventory or critical equipment can halt your operations overnight. Commercial property insurance provides a financial safety net so that damage, theft, or disaster doesn’t result in permanent loss. But protection is only effective when your coverage reflects your current asset list and location risks.
Underreporting the value of your inventory or equipment can reduce your payout during a claim. Review and update your policy at least once a year—or any time your business grows or changes.
With the right policy in place, you can focus on running your business, knowing your essential property is protected from the unexpected.