Tool theft insurance guide: policy insights and tips

Occupational hazards are a given and for tradespeople it can include (unfortunately) tool theft and damage. No matter your trade, tools insurance cover can provide a safety net in the event your tools are stolen – after all, it’s not just about the tools, it’s about your livelihood.

We’ll be diving into what tools insurance is, what it can cover and key notes for choosing a policy.

What is tool insurance?

In simple terms, this covers the cost to repair or replace tools that are stolen or damaged by events like fire. Coverage can apply to tools kept at home or in vehicles depending on the terms of the policy.

The aim is to provide financial protection and minimise the disruption of having tools stolen or damaged for small businesses and contractors alike. No matter how diligent you are, there’s always a risk.

As with any insurance, it’s not a one-size-fits all solution so research what’s available to find the best option for your line of work.

It’s often included with standard tradesman insurance or available as an add-on alongside other cover like public liability insurance and professional indemnity.

What tools insurance covers

This’ll always depend on the insurer your policy is with but most tools cover includes ‘tools of trade’ i.e. smaller tools and equipment needed to do your job – hand tools and handheld power tools like:

• Drills
• Nail guns
• Sanders
• Hammers
• Spanners
• Saws
• Pliers
• Blow torches
• Screwdrivers

Some policies might include business equipment like laptops, phones and cameras but might be limited to only 1 or 2 items. Always check with your insurer what’s covered – you might need business equipment cover as well.

Overnight cover

Some insurance will also protect your gear in the event it’s stolen from your van or vehicle overnight. Again, always check your policy documents if this is a must-have for you.

As an add-on with other cover

If it’s included as an add-on, what it covers might differ to standalone tools insurance but always check your policy.

What tools insurance doesn’t cover

Now we know tools insurance specifically protects trade tools owned in the event of loss, theft or damage, we’ll quickly go over what it doesn’t usually cover:

Tools in transit – work tools that are lost, stolen or damaged while being loaded, unloaded or transported in a vehicle

Owned plant – plant owned by you like scaffolding, diggers, excavators and temporary buildings

Hired in plant – plant hired by you to complete a project like diggers and rollers

Business tools – devices and job-specific tools & electrical equipment like computers, mobile phones, cameras and graphics tablets

Equipment breakdown – mechanical or electrical breakdown of kit like printers, constructional plant machinery and heating, security & telephone systems – excluding wear & tear, damage or theft

If you did need coverage for any of the above, you can get additional insurances like business equipment insurance, tools in transit insurance and owned & hired-in plant cover. You will often find these available as add-ons with other business or trades insurance.

Benefits of tools insurance

Hinted at earlier in this guide, the perks of tools insurance cover are 3-fold:

• Financial protection – Small businesses or contractors could be hit hard by a £1000+ bill for new tools or repairs. Insurance covers the cost of replacing or repairing damaged or stolen tools.
• Increased peace of mind – In the event of damage or theft, cover is an extra safety blanket – one less thing to keep you awake at night.
• Quicker recovery – Not just about footing the bill for lost, stolen or damaged tools, getting help covering the costs of repairs or replacements can minimise delays in getting back to work.

How does tool insurance work

Fundamentally it works like any other insurance policy – you pay a premium, if there’s an incident you make a claim, and upon approval you pay an excess and get a payout. You might find it offered as standalone cover but you’ll also find it as an add-on option with some business insurance.

Specifics can depend on the insurer but generally tool insurance will pay a lump sum to either repair all or part of damaged property or to replace them if they’re unrepairable, lost or stolen.

The amount that’ll be paid out will depend on the total level of cover, the value of tools and equipment claimed for and if payments are on a new-for-old or current market value basis.

*It’s essential to understand the claims process for your insurer and what is required to make a claim.

How much does tool insurance cost?

The cost of tool insurance varies depending on the policy and the level of cover chosen. But factors that may impact your premium include:

• Total value of the tools and equipment you need to insure
• Type of cover you need e.g. business tools, plant or personal tools insurance
• Job type and risks associated with your business
• Payment basis e.g. are you covered for ‘new-for-old’ or the current ‘market value’
• Extra cover you need e.g. professional indemnity, employer’s liability, public liability insurance, European cover, overnight cover, tools in transit cover etc.
• Payment option e.g. some insurers offer discounts for a one-time annual payment vs monthly

Tool insurance can be an affordable way to protect your business against tool theft and damage but always review policy details and understand payment terms before purchasing. Purchasing business insurance that isn’t suitable may lead to additional charges for policy amends or cancellations.

Insurance policy considerations

It’s not just about the money (the premium cost and cover limit) – it’s all in the details! For example, there’ll normally be conditions to meet or exclusions for circumstances or property types not covered.

Security conditions

Taking reasonable care to secure your tools and equipment is a very common insurance condition. Rule of thumb? Don’t give thieves easy access – you could invalidate your policy. A few tips:

• Lock all windows and doors (home and vehicle)
• Try not to leave them in a vehicle overnight
• Don’t leave them in an open, unattended vehicle
• Use secure equipment storage (van vaults, upgraded locks etc.)
• Make sure vehicles used to store equipment are roadworthy/maintained
• If you have to, used a locked garage

It’s essential to review insurance policy wording and understand security requirements. Take extra steps to protect your gear – we’ve got 10 ways to keep your tools safe to get you started.

Excluded circumstances

Most policies will also have a list of exclusions outlining circumstances that won’t be included in the coverage.

You’ll normally find negligence at the centre of most exclusions that’ll invalidate your tool insurance policy. Some examples could be:

• Not taking reasonable care to protect tools (e.g. locking windows & doors, securing vehicles)
• Failing to report tool theft or damage promptly
• There’s no evidence of forced entry
• Equipment was damaged by general wear and tear
• Tools left in (and stolen from) an uninsured location e.g. work site

It’s also good to check if accidental damage is covered in your policy, or claims arising from the actions of employees.

Excluded property

In the context of tools insurance for tradies, you’ll normally find certain business equipment won’t be covered like money, credit cards, business documents, sat nav equipment, and electronic devices (phones, cameras, computers etc.) unless otherwise stated in your policy documents.

‘New for old’ or ‘market value’

Briefly mentioned above, the basis of replacement will impact how much tool insurance costs and the pay out you’ll get for a successful claim.

New-for-old – Payout is based on the current cost of purchasing a new replacement item.

Market value – Payout is based on the current worth of the item considering its age and condition.

Getting the right tool insurance

Getting the right tool insurance requires careful consideration of your business needs and properly reading through policy documents to understand what you’ll be covered for. It’s wise to check:

• Total value limit – Add up the total sum of all vital equipment and tools and check the policy limit covers this.
• Single article limit – Check the most valuable tool you want to protect and that any single article limit is sufficient.
• Tools overnight – Make sure the policy covers equipment left in homes or vehicles overnight.
• Transit cover – If you need it, be sure your insurance includes tools in transit cover.
• Types of tools covered – Think about the type of tools you use and choose the right insurance type.
• Exclusions – Consider what items or circumstances you need coverage for and check they’re not excluded.

Consider a combined policy

A combined insurance policy means you don’t have to juggle several policies across different providers.

Our own Trades Insurance combines Public Liability, Good and Tools cover and Employers’ Liability as standard. Our Goods and Tools cover includes £2,500 of cover at no extra cost with claims paid out on tools stolen from your van overnight!

Other perks include:

• Optional add-ons like Contract Works, Hired in Plant, Owned Plant, and Professional Indemnity
• Nil excess on most professions covered
• Real support from in-house dedicated experts
• No hidden fees

Have a question? We’ve answered some FAQs below or you can contact us and speak to our in-house experts. If you’re ready you can go straight to getting a quote today through our online quote and buy.

Tool insurance FAQs

How do I know if my existing policy covers tools?

Read through your policy documents and see if your tools are included – it might be referred to a ‘tools & goods’ or ‘equipment’ cover. For certainty is recommended to check directly with your insurer.

Is tools cover included with business insurance?

Some will business cover include tools but check with your provider. If it’s included, make sure it covers what you need (tool types and value limits). If it isn’t included, it might be available as an add-on.

Can I insure tools in my company van?

Short answer is yes, but it depends on the policy and insurer. Many will include storing gear in vans overnight and even tools in transit insurance. Check your policy before leaving tools in vehicles.

Do you need receipts for tool insurance?

It’s best practice to keep receipts or other proofs of purchase. This will help calculate the total sum to insure, the single item limit you need and prove ownership and verify amounts in the event of a claim.

Does public liability insurance cover tools?

No. Public liability insurance covers damage to third-party property or injury to third-parties, not tools that are stolen, lost or damaged.

Does tool insurance provide instant cover?

This’ll be dependent on who the policy is with but typically, yes, you should be covered as soon as your policy is confirmed or approved.