Tools & Equipment Insurance
Replacement Cost vs. Actual Cash Value on Tools Policies
Always choose replacement cost if you can. ACV pays less because it deducts depreciation — leaving you short on what it actually costs to replace stolen or damaged tools.
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Should I choose replacement cost or actual cash value for my tools?
Replacement cost (RC) pays what it costs to buy the same or equivalent tool new today — no depreciation deduction. If your 3-year-old drill is stolen, RC pays for a new comparable drill.
Actual cash value (ACV) deducts depreciation. That same 3-year-old drill might only recover 50–60% of replacement cost under ACV. For a $400 drill, that’s $200–$240 — not enough to replace it.
RC coverage costs 10–20% more in premium, but the payout difference on a real claim is often 2–3x the premium difference. For contractors, whose tools depreciate quickly with daily use, replacement cost coverage is almost always the right choice.
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