If you're a tradesperson in the construction industry or any profession where tools are essential, you understand that your tools are your lifeblood. Without them, you simply can't work. As you consider how to best protect your business, a crucial question is: Is tools insurance truly worth the cost?
This guide explores the value and necessity of tools insurance to help you decide if it's the right protection for you.
Tools insurance is designed to protect you financially when the unexpected happens to your essential work tools. Specifically, it covers the cost to:
- Replace tools that are lost or stolen: Whether they are taken from your van, a job site, or even your locked workshop.
- Repair or replace tools that are damaged: If your tools are damaged by accident, fire, flood, vandalism, or other covered events.
This coverage typically extends to a wide range of tools, including:
- Portable powered hand-held tools
- Non-powered hand-held tools
- Tools that you own personally
- Tools that belong to your employees or apprentices
- Hired or leased tools
By covering this broad range, tools insurance aims to be a comprehensive safety net for your essential equipment.
Unlike employers’ liability insurance, you are not legally required to have insurance specifically for your tools. However, while it's not a legal obligation, tools insurance is widely considered to be an essential part of a sound business setup for anyone who relies on tools for their income.
Even if you are incredibly careful, unforeseen events can occur that put your tools at risk. Consider these potential scenarios:
- Theft from vehicles and worksites: Tools can be stolen from your van, even if it's locked, or from a job site, despite security measures.
- Accidents and damage: Tools can be damaged in workplace accidents, vehicle collisions, or by vandalism.
- Natural disasters: Events like floods or storms can render your tools unusable.
The consequences of tool loss or damage can be severe:
- Inability to work and income loss: If you can't replace damaged or stolen tools quickly, you may be unable to complete current projects or take on new work, leading to immediate income loss.
- Breach of contract: Being unable to complete projects due to lack of tools can put you in breach of contracts with clients, potentially leading to legal and financial repercussions.
- Business risk: Significant tool loss or damage can severely impact your business financially, potentially jeopardising its long-term viability, especially for smaller businesses.
- Replacement costs can be substantial: Over years of trading, you build up a valuable collection of tools, and the cost to replace everything at once can be far higher than you might initially realise.
Ultimately, the key benefit of tools insurance is peace of mind. Knowing you have insurance allows you to work with confidence, secure in the knowledge that if the unexpected happens, you can:
- Replace your tools quickly: Insurance payouts allow for rapid tool replacement, minimising downtime.
- Get back to work sooner: Reducing downtime means you can fulfil existing contracts and bid on new jobs without prolonged interruption.
- Protect your income and business reputation: By ensuring business continuity, you safeguard your income stream and professional standing.
Comprehensive tools insurance policies often provide broad coverage in terms of time and location:
- 24/7 coverage available: Many policies offer optional 24-hour coverage, seven days a week, providing protection around the clock.
- Tools in vehicles: Coverage often extends to tools left in your vehicle, provided you take basic security measures, such as ensuring:
o There are clear signs of forced entry in case of theft from a vehicle claim.
o Van doors are locked.
o Windows and other openings are fully closed and properly fastened.
- Tools on site: Tools are typically covered when left on a job site, provided they are stored in a locked building or secure location.
- Geographic coverage: Most policies cover your tools within the UK and throughout the European Union, which is essential if you travel for work internationally.
While comprehensive, tools insurance policies do have some common exclusions:
- Forced entry requirement: For theft claims, especially from vehicles, insurers often require "clear signs of forced entry" as evidence of a break-in, to prevent claims for simple loss or unsecured theft.
- Damage from tool malfunction: Damage caused by a tool's own internal breakdown or explosion is usually not covered.
- Loss due to disappearance or inventory shortage: Simple "disappearance" of tools, or losses only discovered during routine stocktaking, are typically excluded. Insurers generally require evidence of a specific event like theft or damage, not just unexplained loss.
- Tools unattended in unlocked open environments: Tools left unattended and unsecured in openly accessible, unlocked areas are unlikely to be covered.
- Mobile devices and wearables: Mobile phones, smartphones, smartwatches, and similar wearable devices are almost always specifically excluded from tools insurance. These require separate insurance.
- Policy excess: You will typically have to pay an 'excess' (the first portion of any claim) as detailed in your policy. Insurance policies do not cover the excess amount.
It is vital to carefully review the policy wording of any tools insurance policy you are considering to fully understand the specific exclusions, conditions, and limitations that apply.
The amount of cover you need is directly linked to the total value of your tools. To determine this:
- Create a detailed inventory: List all your portable powered and non-powered hand tools, including employee tools and hired/leased equipment.
- Document tool values: Compile receipts, invoices, or other proof of purchase for your tools to help establish their value.
- Calculate total replacement cost: Work out the current cost to replace all the tools on your inventory at today's prices. This is the amount of cover you should aim for.
Tools insurance policies are often more affordable than tradespeople expect. While the exact cost will vary depending on the value of your tools, the level of cover, and your specific circumstances, many providers offer competitive rates, and you might find it "costs less than you think."
Getting an indicative quote for tools insurance is usually quick and straightforward. Many insurance providers specialising in tradesperson insurance offer online quote tools where you can get an estimate in just a few minutes.