ToolShare Co-op

The Challenge

ToolShare Co-op is an equipment rental platform connecting contractors with idle equipment. They facilitate rentals of everything from power tools to excavators.

Equipment damage was a constant problem:

• $180K/year in unrecovered damage costs
• Contentious disputes between renters and owners
• Security deposits created friction at checkout
• Some owners refused to list expensive equipment

ToolShare was absorbing damage costs to maintain platform trust, eating into already thin margins.

The Old Model

ToolShare's previous approach to equipment protection:

The Solution

ToolShare launched "ToolGuard" using CoverKit's rental protection API:

// Calculate protection premium at checkout
async function calculateRentalTotal(equipment, rentalDays) {
  const rentalCost = equipment.dailyRate * rentalDays;

  // Get protection quote
  const quote = await coverkit.quotes.create({
    product: 'rental_protection',
    coverage: {
      equipmentValue: equipment.value,
      rentalDuration: rentalDays,
      equipmentType: equipment.category,
      renterProfile: await getRenterRiskProfile(),
    },
  });

  return {
    rental: rentalCost,
    protection: quote.premium,
    total: rentalCost + quote.premium,
    // Deposit waived with protection
    depositRequired: 0,
  };
}

// File damage claim
async function reportEquipmentDamage(rentalId, damageReport) {
  const rental = await db.rentals.get(rentalId);

  const claim = await coverkit.claims.create({
    policyId: rental.protectionPolicyId,
    type: 'damage',
    description: damageReport.description,
    amount: damageReport.repairEstimate,
    documents: damageReport.photos,
  });

  // Owner paid directly, no platform involvement
  return claim;
}

The Economics

ToolGuard fundamentally changed ToolShare's unit economics:

The Results

Revenue Transformation

ToolGuard turned insurance from a $180K annual cost into an $850K revenue stream. The 35% margin on protection premiums exceeded their margin on rental commissions.

Checkout Experience

• No more security deposits (waived with protection)
• Checkout conversion increased by 23%
• Higher-value equipment now listed

Platform Trust

• Owners more willing to list expensive equipment
• Disputes handled by CoverKit, not ToolShare support
• Owner satisfaction increased by 41%

Risk Reduction

Interestingly, claims rates actually decreased after implementing protection. When renters have skin in the game (protection premium), they treat equipment more carefully.

Key Takeaways

• Embedded insurance can transform cost centers into profit centers
• Protection as deposit alternative improves checkout conversion
• Well-designed protection reduces moral hazard and claims rates
• Platform margins on insurance can exceed core business margins