Who Insures Skid Steers, Backhoes, and Trackhoes? Where Contractors Get Equipment Coverage
If you own a skid steer, backhoe, or trackhoe, you have probably asked yourself a simple question: who actually insures this equipment, and what kind of coverage do I need?
The short answer is that specialized commercial insurance agencies and insurance carriers that work with contractors typically provide equipment coverage for excavation, grading, utility, demolition, septic, and site-work businesses. However, the right policy depends on how the equipment is used, where it travels, whether it is financed, and what contractual requirements apply to your jobs.
Whether you own one skid steer or a fleet of excavators and support equipment, understanding how equipment coverage works can help protect your business from expensive downtime, theft, damage, and contractual headaches.
Who Insures Skid Steers, Backhoes, and Trackhoes?
Contractors typically obtain equipment coverage through commercial insurance agencies that specialize in construction and excavation risks.
Coverage is often written as part of an inland marine policy, commonly called contractor's equipment insurance. This type of policy may cover owned, leased, rented, or financed equipment depending on the policy terms. Equipment owners often work with agencies that understand excavation operations, utility work, land clearing, grading, demolition, and other heavy construction activities because these operations have unique risk exposures.
The goal is not simply finding an insurance policy. The goal is finding coverage that matches how your equipment is actually used in the field.
Understanding the Difference Between Equipment Insurance and General Liability
One of the most common misconceptions among contractors is assuming general liability insurance protects their equipment.
In most cases, it does not.
General liability insurance primarily helps protect against claims involving:
Bodily injury to third parties
Property damage to others
Completed operations claims
Certain legal defense costs
For example, if a trackhoe accidentally damages a customer's underground utility line during excavation, general liability may respond depending on the circumstances and policy language.
However, if that same trackhoe is stolen from a jobsite, general liability will typically not cover the machine itself.
That is where contractor's equipment coverage becomes important.
What Contractor's Equipment Insurance Typically Covers
Contractor's equipment insurance is often written through an inland marine policy designed specifically for mobile construction equipment.
Depending on the policy, coverage may include:
Skid steers
Backhoes
Excavators
Trackhoes
Bulldozers
Compact track loaders
Directional drilling equipment
Trenchers
Attachments and specialized tools
Utility construction equipment
Land-clearing equipment
Covered causes of loss may include:
Theft
Fire
Vandalism
Collision
Overturn
Certain weather-related losses
Transportation-related damage
Coverage details vary significantly between policies, so contractors should carefully review covered causes of loss, exclusions, deductibles, and valuation methods.
Why Lenders Often Require Equipment Coverage
If you financed your skid steer, backhoe, or excavator, the lender may require physical damage coverage throughout the loan period.
The reason is straightforward.
The lender has a financial interest in the machine until the loan is paid off. Equipment coverage helps protect that interest if the machine is damaged or destroyed.
Many financing agreements require proof of insurance before funding equipment purchases. Contractors may also need updated certificates or evidence of coverage during the life of the loan.
Why General Contractors Require Proof of Insurance
Many general contractors and project owners require subcontractors to provide certificates of insurance (COIs) before work begins.
Depending on the project, they may request evidence of:
General liability insurance
Commercial auto insurance
Workers' compensation insurance
Umbrella liability insurance
Contractor's equipment coverage
This is particularly common on utility, municipal, infrastructure, and commercial construction projects where expensive equipment is routinely present.
If you are bidding larger jobs, having the proper coverage already in place can prevent delays when contracts are awarded.
What Most People Get Wrong
Many contractors focus entirely on the machine's purchase price and ignore how difficult equipment can be to replace.
The real financial risk is often downtime.
Imagine a utility contractor who has a main excavator stolen on Monday morning. The replacement machine may not be immediately available. Crews may sit idle, schedules can slip, penalties may apply, and customer relationships may suffer.
The cost of lost productivity frequently causes more stress than the equipment loss itself. Smart contractors evaluate insurance not only based on the machine's value but also on how essential that machine is to daily operations.
Common Exclusions Contractors Should Know About
Not every loss is automatically covered.
Contractors are often surprised to learn that certain situations may be excluded or limited.
Examples may include:
Wear and tear
Mechanical breakdown
Intentional damage
Certain employee dishonesty claims
Improper maintenance issues
Manufacturer defects
Unexplained disappearance
Coverage details vary by insurer and policy form, making policy review an important part of the buying process.
When discussing equipment coverage with an agent, ask specifically about exclusions that apply to excavation and site-work operations.
Equipment Theft: A Growing Concern for Contractors
Equipment theft remains one of the biggest concerns for excavation businesses.
Skid steers are particularly attractive targets because they can be transported relatively quickly using standard pickup trucks and trailers.
Contractors can reduce risk by:
Using GPS tracking systems
Securing equipment yards
Installing immobilization devices
Using wheel or track locks
Improving site lighting
Storing equipment behind locked fencing
Photographing equipment and serial numbers
Insurance may help with covered losses, but prevention remains your first line of defense.
What Affects Equipment Insurance Pricing?
Insurance companies consider several factors when evaluating equipment risks.
Factors that commonly influence pricing include:
Type of Equipment
A compact skid steer presents a different risk profile than a large hydraulic excavator operating around underground utilities.
Equipment Values
Higher equipment values generally create greater potential loss exposure.
Equipment Age and Condition
Older machines may present different risks than newer equipment.
Geographic Area
Theft rates, weather patterns, and regional construction activity can influence risk evaluations.
Claims History
Prior losses often affect underwriting decisions.
Security Measures
Secure storage facilities, cameras, fencing, and GPS monitoring may positively influence the underwriting process.
Business Operations
Excavation, demolition, utility work, drilling, and land clearing each have unique exposure considerations.
Questions to Ask Before Buying Equipment Coverage
Before purchasing coverage, contractors should ask:
Is coverage based on actual cash value or replacement cost?
Are rented or leased machines covered?
Are attachments included?
Is theft coverage included?
Does coverage apply while equipment is being transported?
Are employee-operated losses covered?
How are total losses valued?
What deductibles apply?
Are borrowed machines covered?
What exclusions are most relevant to excavation contractors?
These questions can help avoid surprises after a loss occurs.
Building an Insurance Program Around Your Equipment
Equipment insurance works best when it is part of a larger risk management program.
Many excavation contractors combine equipment coverage with:
General liability insurance
Commercial auto insurance
Umbrella liability insurance
Workers' compensation insurance
Pollution-related coverage when applicable
In fact, many contractors find it easier to manage their coverage through a single specialist agency. If you're evaluating your options, our guide on Can One Agency Bundle General Liability, Workers' Comp, and Equipment Coverage for an Excavation Contractor? explains how bundled insurance programs often work for excavation businesses.
New business owners may also benefit from reading How Fast Can a New Excavation Business Get Insured? From Quote to Certificate of Insurance, which explains the typical process for obtaining coverage and receiving insurance documentation before starting work.
For information about underground utility safety practices and excavation requirements, contractors should also review https://call811.com/ before beginning excavation projects. Contractors working around buried infrastructure can also benefit from the federal guidance available through OSHA Excavation and Trenching Safety.
How to Get a Quote for Skid Steer, Backhoe, or Trackhoe Insurance
The quote process is usually straightforward when accurate information is available.
Most agents will request:
Business name
Years in operation
Equipment schedule
Serial numbers
Equipment values
Operating states
Description of operations
Previous insurance information
Claims history
Providing complete information upfront helps agents identify coverage options that fit your operation.
Frequently Asked Questions
Do I need insurance on a financed skid steer?
Most lenders require physical damage coverage while the equipment loan remains active. Requirements vary by lender and financing agreement.
Does commercial auto insurance cover a trackhoe?
Usually not. Commercial auto insurance typically covers licensed vehicles driven on public roads. Contractor's equipment coverage is generally used for excavators and similar equipment.
Will equipment insurance cover theft from a jobsite?
Many policies may cover theft, but coverage depends on policy terms, exclusions, security requirements, and the specific facts of the loss.
Are skid steer attachments covered?
Many policies can include attachments, but coverage varies. Contractors should confirm attachments are properly scheduled when required.
Can a new excavation company get equipment coverage?
Yes. Many new excavation businesses can obtain equipment coverage, although underwriting requirements vary based on experience, equipment values, operations, and loss history.
Final Thoughts
Skid steers, backhoes, and trackhoes are essential revenue-producing assets for excavation contractors. The right equipment coverage can help protect those assets from theft, damage, and other covered losses while helping satisfy lender and contractual requirements.
Because excavation operations have unique risks, it is important to work with professionals who understand how contractors actually use their equipment in the field, from utility trenching and site development to demolition and land clearing.
If you'd like help reviewing your current equipment coverage or exploring options for your business, Excavating Insurance Partners can provide a free, no-obligation quote and help you understand which coverages may fit your operation. Learn more or request a quote here: https://www.excavatinginsurancepartners.com/quote.
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