Among a tradesman’s most important assets are his tools. They can be protected with tool insurance, but what exactly are they covered for?
Many tradesmen assume that tool insurance is similar to car insurance, in that pretty much any event will be covered, and all policies cover much the same things.
Unfortunately both of these assumptions are not true.
Firstly, not all tool insurance policies are the same. Secondly, a tool insurance policy will only cover a number of events, and there are many events which may not be covered depending on the policy you have.
What Is Covered By Tool Insurance?
The coverage of your tools will depend on the type of policy you take out. Many tradesmen make the mistake of choosing the cheapest policy, either because they bypass using a broker or they use a broker who doesn’t know enough about the product.
Below we have split tool insurance policies into three different categories. These categories will cover most tool policies issued in Australia.
The only way to know which category your policy fits into is to read the policy documents carefully, or speak to an insurance adviser that actually understands tradesman tool insurance (hint: Trade Risk understands tool insurance!)
Basic Cover
The cheapest tool insurance policies provide a very basic level of cover. Generally they will cover the following events:
- Fire Damage
- Storm Damage (excluding flood)
- Vehicle collision or rollover damage
A basic cover will not protect your tools against theft, despite the fact that this is the biggest reason for tradesmen taking out tool insurance.
If you do choose to take out the cheapest policy you can find, be very careful to check whether or not you are covered for having your tools stolen. If you’re not covered, then you might as well not even bother.
Standard Cover
The most common form of tool insurance provides an adequate level of cover for most tradesmen, and is certainly the most popular form of cover.
A typical standard tool insurance policy will cover the following events:
- Fire Damage
- Storm Damage (flood coverage in some cases)
- Vehicle collision or rollover damage
- Theft of tools following violent or forced entry
The last point regarding theft basically means that your tools need to be stolen from a secure location in order for them to be covered, and there must be evidence that force was used to access them.
Examples of forced entry can include busted locks on a tool box secured to your ute or trailer, broken windows or door locks on your van, or forced entry to your home or shed where the tools are stored.
Comprehensive Cover
For tradesmen seeking a greater level of protection we have what we call comprehensive policies.
These policies include cover for everything listed above, as well as the following:
- Theft of tools in ‘open air’
- Accidental damage
- Flood cover
There are some restrictions with ‘open air’ cover for tools, but essentially it takes away the need for evidence of violent or forced entry in order to make a claim. You will still need a police report of the theft however.
Accidental damage cover will cover you for events such as dropping a power drill or other piece of equipment, but it will not cover the items whilst it is in use. Wear and tear will also be taken into account in some cases.
What Is Not Covered By Tool Insurance?
There are some events which will not be covered by tool insurance regardless of how basic or comprehensive the policy may be.
No form of intentional damage will not be covered, nor any damage caused by using the tool or equipment incorrectly.
Any unlawful use will be not be covered, and it’s the same story with any type of claim which involved dishonesty or fraud.
Important Information
The information above is just a summary of the coverage offered by various levels of tool insurance. You should not use this information to help you choose an insurance policy. Instead it is designed to make you aware that different tool policies provide very different levels of cover.
The best way to choose a tool insurance policy that suits your needs and budget is to speak with a qualified insurance adviser that understands tradesman insurance.
The team here at Trade Risk understand the insurance needs of tradesmen, and we understand how tool insurance works. We have helped many tradesmen not only with setting up their policies, but also on successfully claiming on their policies.
What’s the point of paying for tool insurance if you cannot claim on it? You can trust Trade Risk to get the right policy for your needs and also to help you through the claims process when you need it.
