CSLB Contractor's Law & Business Practice Exam

Which of the following is not covered by standard contractor's insurance policies?

1. Employees' tools

2. Contractor's tools

3. Damage from fire, storm, theft, and vandalism

4. Job materials

The correct answer is: Employees' tools

The reasoning behind identifying employees' tools as not typically covered by standard contractor's insurance policies centers on the nature of these policies and their specific coverage features. Standard contractor's insurance, often referred to as commercial property or general liability insurance, generally provides coverage for the contractor's own tools, equipment, job materials, and damages resulting from fire, storms, theft, and vandalism related to the contractor's operations. In this context, contractor's tools are usually considered business-owned equipment and are protected under standard insurance plans. Similarly, job materials, which refers to supplies used in the course of a project, are also typically included in coverage. Damage from environmental risks, such as fire and storms, falls under general property damage provisions, ensuring that contractors can recover losses from unforeseen events. However, employees' tools are usually personal property, as they belong to the workers rather than the contractor. Standard insurance policies are designed to protect the contractor's business assets rather than the personal tools of employees. As such, coverage for employees' tools typically requires separate policies or additional endorsements, emphasizing the distinction between what is owned by the contractor and what belongs to the employees. This clarification aids in understanding the limitations of coverage within standard contractor's insurance policies.