Tool insurance

What is tool insurance?

Tool insurance covers you if your tools are damaged or stolen through no fault of your own. There are various policies that provide different levels of cover. Most default covers protect against fire and vehicle collisions.

The most comprehensive cover will cover all types of theft and accidental damage, as well as fire and flood damage. Cheaper insurance won't provide as much cover. Alternatively, you may find that your home or business insurance already provides tool insurance. For most claims, you will need to provide evidence to your insurance provider of your damaged or lost tools.

Tool insurance can be an invaluable and necessary expense. It can provide you with peace of mind in case you find yourself without tools. You can buy replacements with the help of insurance pay outs.

Continue reading to find the best policies for you and how to make a claim in case the worst happens.

What does tool insurance cover?

Tools are an essential part of running many businesses. However, they can also be very expensive and vulnerable. From 2017 to 2020, the Met Police recorded 21,307 cases of tools stolen from vans. Of this, only 71 thieves were caught and charged.

Some insurance policies can cover your tools 24/7, although others require an overnight protection policy add on.

Although policies vary, even the cheapest cover should protect your tools whilst they are in transit and at risk of collisions or other damage. They may also cover your tools if they are stolen from a secure location. Some policies cover all of the elements, including fire and flood damage.

Insurance will provide you with the money to buy replacements so that you can get back to work as quickly as possible.

What doesn't tool insurance cover?

Even the most comprehensive cover can have limitations. You would not be covered if your tools are damaged through misuse or general wear and tear. Tools that receive cosmetic or deliberate damage are not covered either. Manufacturing faults should be taken up with the manufacturer and confiscation by lawful force is a legal issue.

Some people may try to cheat the system by using a false claim to get money for their tools. This is why you will be required to provide evidence on all of your claims so that the insurance company can verify if it is legitimate.

What level of cover should I get?

The price of insurance will depend on the level of cover and the provider. As you might expect, cheaper insurance will provide less coverage than the more expensive choices. It's worth checking whether tool insurance is included in your home or business insurance policy. You could ask for it to be included as an add on when you look for your next policy.

Basic

This provides the least amount of coverage. You will only be covered for limited scenarios and circumstances. For example, you will be able to claim on your insurance for fire and storm damage, but not for tools damaged by floods. You will also be covered if your tools are in transit and involved in a vehicle collision. However, the one policy that lots of tradesmen look out for is cover for theft and this isn't provided with most basic policies.

Standard

Standard cover offers the same as the basic cover, but with a few extras. For example, you are still covered for fire, storm and collision damage, but you are also covered for theft. This is for instances where your tools have been stolen following forced entry to a secure location. You would not be covered if your tools were left in an unlocked vehicle or storage site.

To claim on stolen items, you will need to have a Crime Reference Number (CRN). This can be obtained after you have filed a report with the police. Your insurers will also need other evidence to validate your claim. This could be in the form of photographic evidence of busted locks, broken windows or other signs of forced entry.

Comprehensive

Comprehensive cover provides the most security as it covers most eventualities. You will be protected by everything mentioned in the previous two cover types. Comprehensive insurance will also cover you for accidental damage, flooding and tools that are stolen in 'open air' (not in a secure location).

You will need to file a police report for stolen goods and pass on the necessary information, including the CRN, to your insurance provider.

What insurance policies include tool insurance?

You may find that you don't need to take out individual tool insurance if you are already covered by the policies of another insurance type.

Most companies will have some form of Public Liability insurance. This is the insurance that protects you against claims made for injury or loss and damage. You may find that tool insurance is included as an add-on to your policy.

Van insurance may provide tool insurance as an add-on or as another policy. Cover does vary, but it will usually protect your tools against theft and damage. However, this won't always won't apply if you leave the tools in your van overnight. If you want to leave your tools in the vehicle overnight, especially if it's outside, you should make sure it's specified in the policy.

Your household insurance may cover your tools if they aren't for business use. You should let your insurance provider know if you work from home so that they can adjust your cover to include work tools.

Is tool insurance worth it?

Individual tool insurance may not be necessary if it is included in another policy that you already have. You may also consider self-insuring instead of third-party insurance. This is when you set aside money periodically to cover yourself. However, this is unlikely to give yourself the same level of cover as going through an insurance company.

The most important thing that you need to ask yourself is whether you could manage without your tools. If the answer is no, then you should strongly consider taking out insurance. Losing your tools could affect your business and result in significant financial losses.

Excess

You will need to consider the excess of the insurance before you take it out. If it is too high and works out more than the actual tools, it may not be worthwhile.

Excess is the amount that you pay for a claim. The amount will be pre-arranged with the insurance company. There are two types of excess - compulsory and voluntary. Compulsory excess is set by the insurance company and has a minimum amount that you must pay. Voluntary excess can be paid in addition to the amount sent by the insurance company. You're liable for both kinds of excess if you make a claim.

How can I claim on my insurance?

Your insurance company will want you to provide evidence when you make a claim. This is to make sure that your claim is legitimate before they give you a pay out.

You should keep the receipts of your purchases to show the name of the tools and how much you originally paid. It's also helpful to take photos and keep note of any serial numbers so that your tools can be easily identified if they are stolen.

You should send photos of the damaged tools that you are claiming for. Stolen tools should also be reported to the police. Once you have filed the report, you should be given a Crime Reference Number (CRN). Send this reference number to your insurance company with your claim.

Which tools can I insure?

Whatever your profession, the majority of tools can be insured. These include:

• Handheld tools- such as hammers, screwdrivers and scissors
• Power tools - such as drills, chainsaw and hairdryers
• Owned/leased tools - tools that you own or are currently renting

Does tool insurance cover machinery?

Machinery is covered under policies such as Plant and Equipment insurance. It covers heavy machinery such as diggers, forklifts and cherry pickers. The contractor insurance provides cover if you hire machinery or use your own to work on sites.

The insurance will cover you if the equipment is lost, damaged or stolen, much the same as tool insurance.

Who can buy tool insurance?

You can buy insurance if you use tools in your line of work. Although builders and plumbers may come to mind first, jobs such as hairdressers and gardeners also use tools and equipment that needs cover.

You can buy tool insurance as a company or if you're self-employed. Most companies will find that tool insurance is included with their Public Liability insurance so they won't have to buy it separately.

Most insurance is cheaper but gives less coverage if you are self-employed or a sole trader. You can find out what you're covered for by contacting your insurance agency.

Should tools for personal use be insured?

If your tools aren't used for business use, such as working on paid projects, then you may not need tool insurance. Tools used for hobby or home repair can be covered by your home insurance. If they're more expensive, you might want to consider buying personal belongings cover. You'll be able to tailor the insurance to the individual tools.

If your tools are used for business use, it's unlikely that they will be covered on your home insurance too. Check with your insurance provider and then look for tool or Public Liability insurance.

How can I protect my tools?

Although you can be covered for all types of scenarios, the safest solution is to look after your tools. Make sure that they are locked up. It's preferable that they are double locked, so that they are locked in a case and kept in locked storage. You should also make sure that the place where you keep the tools (be that in a vehicle, home or premises) is alarmed. You could also place security cameras around the premises. This will deter thieves and might lower your home or business insurance premium.

Make sure that an unattended vehicle is secure by locking the doors and closing the windows. Don't leave your keys lying about, even for a short time. It might also be worth removing your tools from a vehicle overnight if it's practical. If this isn't possible, park you vehicle in a well-lit area with lots of CCTV.

Take photos of all of your tools and keep a record of their serial numbers. You could mark your property by getting them etched or drawing on them with invisible marker. Not only will this make the tools harder to sell, but they will also be identifiable for the police.

If you're lucky, you may never need tool insurance. However, it's there to give you a safety net and provide peace of mind.