Tools and equipment insurance is vital for anyone in the construction sector because, without your tools, you’d be unable to trade.
It covers your tools and equipment against accidental damage or loss due to theft. It also covers any tools that you have hired to complete a project.
What does it cover?
Tools and equipment insurance covers your tools and equipment if those items are accidentally damaged or stolen. It covers both powered and non-powered tools and equipment.
It can be tempting to reduce the amount you insure for to reduce your insurance premium, but you should make sure that you insure for the full value of the items. If you are uninsured in the event of a claim, you’ll be penalised by your insurer because your insurer will apply what’s called the “average clause”, which reduces the amount that they pay in proportion to the amount of your underinsurance.
If you have any particularly expensive items you should check your insurance to make sure that there is not a single item limit that would mean that the item would not be fully covered. You’ll usually be able to increase this single item limit for a small additional premium if you need to do so.
Hired-in tools & equipment
As well as covering your own tools and equipment, you can also cover any hired-in tools and equipment under a tools and equipment insurance policy. These hired-in items will be covered in the same way that they would have been had you owned them.
In addition to covering the tools and equipment, the insurance will also usually cover any ongoing hiring costs for which you’re legally liable in the event of a loss.
As with most insurance policies, there will usually be an excess. This is the amount that you’ll have to pay as a contribution to each claim that you make. Sometimes you can reduce your insurance premium by opting for a higher excess, although obviously this would mean that in the event of a claim you would need to make a larger contribution.
Tools and equipment insurance only covers accidental damage to the tools or the loss of the tools due to theft. It doesn’t cover breakdown or mechanical failure. It should not be viewed as an extended warranty product.
There are often cover restrictions when the tools are left in unattended road vehicles as well. It’s worth checking your policy to find out what those restrictions are because the theft of tools from vans overnight is common. You may need to have an alarm on your van or a specific type of lock. Some insurers exclude all claims when the tools and equipment are left in an unattended road vehicle.
Cover will not usually apply if the tools are stolen from a work site unless they were stolen from a secure, locked storage facility.
There may also be geographical limits in your tools and equipment insurance policy, so if you work abroad, you should check your policy to see whether cover will still apply.
Why do I need this cover?
If you’re self-employed, it’s unlikely your tools will be covered by your household insurance because they are items that you use in your business rather than personal items. As such, you need tools and equipment insurance because as mentioned, without your tools you won’t be able to work.
Tools and equipment insurance is usually relatively inexpensive and comes as part of a tradesman’s insurance package. Knowing that your tools and equipment will be repaired or replaced by your insurer quickly if they’re damaged or stolen gives you peace of mind, and if you do need to make a claim, it won’t be long before you can be back working.