As a tradie or a handyman, if your tools were stolen or damaged and you were unable to use them, your livelihood would undoubtedly suffer. Taking out insurance for your tools is therefore an important step in protecting your business and can help prevent you from suddenly losing your income, or having to come up with large amounts of cash to replace your tools. Below, we’ll take a look at insurance that can help cover your trades’ tools, and what to consider when taking out this cover.

Tools can typically be covered under the General Property section of a Business Insurance pack. Under this section, your business’s portable equipment/tools are covered for accidental damage, theft, as well as damage due to a listed event such as storm or fire, and are covered anywhere in Australia. Equipment and/or plant that is designed to remain at your business premises would not usually be insured under this section, but rather under the Contents section, or other sections of a Business Insurance pack. You can learn about the various sections available under Business Insurance packs in this article.

As with any insurance policy, this cover has some restrictions which are worth understanding to prevent any surprises at claim time. For example, insurance is meant to be for a sudden and unforeseen event so theft of items left in an open-air situation is not typically covered under this policy. Similarly, leaving your tools in an unlocked vehicle would also not be covered. In addition, breakdown, maintenance, scratching, denting, chipping (and other aesthetic defects), and wear and tear are all excluded.

When you select the sum insured under General Property cover, you’ll likely have the option of selecting an overall sum insured amount (also known as blanket cover) or listing individually the items you want insured. While blanket cover may seem like the simpler option, some policies may have limits for certain types of items or categories where these items will only be covered for up to a maximum amount unless they are specified individually. So even if you select blanket cover, ensure you review the individual value of your tools, and check with your broker whether any of them need to be specified individually.

It's also important to bear in mind that insurance is designed to put you back in the same position you were in before the incident occurred. That’s why in the event of a claim, if your policy replaces your tools or equipment, most of the time it will be replaced with a new item of the same (or similar) make, model and capacity, but not better than what you had previously.

When it comes to making a claim under General Property, you will generally be required to provide evidence of the tools you owned. The easiest way to do this is to produce the purchase receipt, but having photos of your major tools can also help in the event of a claim. If you’re unable to prove you had the item in the first place, it’s possible the claim for that item could be denied.

While insurance is designed to cover you for unforeseen incidents, it's not a substitute for overall vigilance. Basic precautions and common sense should be a regular part of your day to day actions, such as securing your vehicle at night, having strong secure locks, and storing tools kept in your vehicle out of sight so that someone looking into the window can’t see them. Some incidents can lead to multiple claims – for example if you leave tools in your vehicle and they are stolen, while your General Property Insurance can cover the tools, any resulting damage to the vehicle, like a broken window would have to be claimed under your Motor Vehicle Insurance, and you’d end up having to pay two excesses.

No matter what trade you’re in, your tools are probably an important part of your business. Having appropriate insurance to cover your tools can help make sure you’re not left with significant out of pocket costs following an unfortunate incident. If you would like to discuss insurance for your tools, talk to an Aon broker.

If you run a trade business and are looking for Public Liability Insurance, contact a member of the team at Aon on 1800 020 339.