The DTLA Theft That Cost More Than the Tools
An electrical contractor was 4 months into a $1.8M tenant improvement on the 22nd floor of a Class A office tower in Downtown LA. The crew had been making good progress — rough-in was 60% complete, and the specialized testing equipment for the building automation system integration was staged on-site for the commissioning phase.
On a Saturday night, someone used a stolen freight elevator access card to reach the 22nd floor. They loaded three rolling tool carts, 12 cordless tool kits, a $12,000 thermal imaging camera, an $8,500 power quality analyzer, and $15,500 in specialty fiber optic testing equipment onto the freight elevator. Total loss: $68,000.
The contractor called his insurance agent Monday morning.
"Your general liability policy doesn't cover theft of your own property."
"Your business property policy only covers equipment at your shop location — not at job sites."
"Your commercial auto policy covers equipment permanently mounted in your vehicles — not equipment you carried to a job site."
Nobody had told this contractor that the three policies he was paying $45,000/year for didn't cover the single most likely loss he'd face in the LA construction market: theft of his tools and equipment from a job site.
An inland marine policy — specifically, a contractor's equipment floater — would have covered the entire $68,000 loss minus a $1,000 deductible. The annual premium for $200,000 in equipment coverage? Approximately $3,000.
The Coverage Gap Nobody Explains
Most contractors believe their insurance covers their tools. It doesn't. Here's why:
General liability covers damage your operations cause to other people's property. It does NOT cover damage to or theft of your own property. If your excavator damages a client's building, GL pays. If someone steals the excavator, GL doesn't pay.
Business property (BOP/BPP) covers equipment at your scheduled business locations — your shop, your office, your warehouse. The moment equipment leaves those locations for a job site, coverage typically ends or becomes severely limited (usually 10% of total insured value).
Commercial auto covers equipment permanently installed in or attached to scheduled vehicles. Tools in a truck toolbox may be covered (check your policy). Tools carried in a truck bed or van and used on job sites are typically not covered.
Inland marine fills all of these gaps. It covers your tools, equipment, and materials:
- At any job site (not just your scheduled locations)
- In transit between sites
- In temporary storage
- On rented or borrowed equipment
- At supplier and fabrication locations
The name "inland marine" comes from the coverage's maritime insurance origins — it protects property that "floats" between locations rather than staying at a fixed premises.
LA's Construction Theft Problem
Los Angeles isn't just a high-theft market — it's the highest-theft construction market in California:
LAPD and LASD data:
- $4.2M+ in reported construction site theft losses annually in LA County
- Actual losses estimated at 2-3x reported amounts (many thefts go unreported)
- Construction site theft increased 34% between 2020-2024
- Average reported theft: $12,000-$15,000
- Highest-value thefts: $100K+ in heavy equipment
What's being stolen:
- Copper wire and pipe — commodity value makes this the #1 target
- Cordless tool kits — DeWalt, Milwaukee, Makita kits resell easily
- Catalytic converters from parked equipment and vehicles
- Heavy equipment — mini-excavators, skid steers (driven off-site or loaded onto trailers)
- Specialty instruments — lasers, levels, testing equipment with high resale value
- Building materials — lumber, drywall, fixtures staged for installation
Highest-risk LA neighborhoods for construction theft:
- Downtown LA (DTLA) — high-rise TI projects with building access challenges
- Hollywood and West Hollywood — residential renovation sites
- South LA — commercial and residential construction
- San Fernando Valley — sprawling residential sites
- Long Beach/Harbor area — industrial and port-adjacent sites
Types of Inland Marine Coverage
1. Contractor's Equipment Floater
The core coverage for most LA contractors. Covers owned equipment — from hand tools to heavy machinery — wherever they're located.
Scheduling vs. blanket coverage:
- Scheduled items: Equipment individually listed with specific values. Required for high-value items ($5,000+). Provides agreed value or replacement cost coverage.
- Blanket coverage: A total limit covering all unscheduled items. Typically covers hand and power tools under a per-item threshold ($2,500-$5,000). No scheduling required — you don't need to list every hammer and drill.
Most LA contractors need both: Scheduled coverage for excavators, compressors, welding machines, and specialty equipment, plus blanket coverage for hand tools, power tools, and small equipment.
Valuation options:
- Replacement cost: Pays to replace stolen or damaged equipment with new equivalent. Costs 15-25% more in premium but eliminates depreciation disputes.
- Actual cash value (ACV): Pays replacement cost minus depreciation. A 3-year-old thermal imaging camera that cost $12,000 might be valued at $7,000 ACV. Saves on premium but creates gaps.
Recommendation for LA: Always insist on replacement cost coverage. Depreciated values rarely cover the actual cost of replacing equipment mid-project, and the premium difference is modest.
2. Leased/Rented Equipment Coverage
LA contractors rent equipment constantly — excavators for foundation work, aerial lifts for exterior projects, cranes for steel erection. The rental company offers a damage waiver, typically charging 15-20% of the rental rate.
The math:
- 30-day excavator rental: $8,000
- Rental company damage waiver: $1,200-$1,600 (15-20%)
- Inland marine rented equipment coverage: Included in your annual policy
Over a year of regular rentals, an LA contractor might spend $8,000-$15,000 on rental damage waivers. An inland marine policy covering rented equipment might add $1,500-$3,000 to the annual premium — saving 60-80%.
Coverage comparison:
| Feature | Rental Waiver | Inland Marine | |---------|-------------|---------------| | Tire/track damage | Often excluded | Typically covered | | Overloading damage | Often excluded | Typically covered | | Operator error | Often excluded | Typically covered | | Theft | Covered | Covered | | Deductible | $500-$2,500 | $500-$2,500 | | Coverage limit | Rental value | Scheduled value |
3. Installation Floater
For LA contractors doing high-end residential or commercial work, installation floaters cover materials and equipment from supplier shipment through installation and testing.
LA luxury market examples:
- Custom cabinetry ($50K-$200K+) — from the mill shop through installation
- Imported stone ($30K-$100K+) — from the quarry through polishing and setting
- Smart home systems ($25K-$150K+) — from manufacturer through programming
- Specialty HVAC ($40K-$200K+) — from fabrication through commissioning
- Wine cellar systems ($15K-$75K+) — from manufacturer through installation
Without an installation floater, these materials are in a coverage gap between the supplier's coverage (which ends at delivery) and the builder's risk policy (which may not cover materials not yet permanently installed).
4. EDP/Technology Equipment
Modern construction relies on technology that standard equipment floaters may not adequately cover:
- Total stations and GPS surveying equipment ($15K-$50K+)
- Construction drones ($5K-$30K+)
- Tablets and ruggedized laptops ($2K-$5K each)
- 3D laser scanners ($50K-$150K+)
- Building automation testing equipment ($10K-$50K+)
An EDP (Electronic Data Processing) endorsement or separate technology equipment floater ensures these items are covered at replacement cost with minimal depreciation.
Theft Prevention Strategies That Lower Premiums
Insurance carriers evaluate your loss control practices when setting premiums. Implementing documented theft prevention reduces both losses and insurance costs:
Job site security:
- Locked gang boxes for small tools and equipment (required by most carriers)
- GPS tracking on high-value equipment ($500+ units that pay for themselves after one recovery)
- Camera systems — battery-powered construction cameras with cloud storage ($200-$500/month, tax deductible)
- Lighting — motion-activated LED floods on construction perimeters
- Fencing — chain-link with locked gates for ground-level projects
- Security patrols — contracted overnight patrols for high-value sites ($15-$25/hour)
Inventory management:
- Tool tracking systems — barcode or RFID tracking for all tools over $200
- Photo documentation — photograph all equipment with serial numbers (helps with claims and police reports)
- Daily tool counts — end-of-day inventory verification by foremen
- Delivery scheduling — time material deliveries to minimize on-site storage before installation
Carrier credits: Contractors who document comprehensive theft prevention programs often receive 5-15% premium credits. GPS tracking programs may receive additional credits from specific carriers.
Filing an Inland Marine Claim
When theft or damage occurs:
- File a police report immediately — required by all inland marine carriers for theft claims. Get a case number.
- Document the loss — photographs of the scene, remaining equipment, signs of forced entry. If tools were in a locked gang box, photograph the damaged lock.
- Provide equipment inventory — serial numbers, purchase receipts, and photos of stolen items. This is where pre-loss documentation pays off.
- Report to your carrier within 24 hours — delayed reporting can jeopardize coverage.
- Preserve the scene — don't clean up or modify the theft scene until the adjuster or investigator has documented it.
Claim timeline: Most inland marine theft claims are settled within 30-60 days of filing. Replacement cost claims may require proof of replacement purchase before final payment.
Getting Started
We structure inland marine programs for LA contractors ranging from one-person operations with $25,000 in tools to large commercial contractors with $5M+ in heavy equipment. Our carrier relationships include specialists in high-theft markets who understand LA's unique risk profile.
Call (949) 200-7171 for an equipment coverage quote. Provide a list of your scheduled equipment and an estimate of your unscheduled tool value — we'll build a program within 24 hours.