Tools of Trade General Property Insurance - by Robert Cooper
The loss of valuable equipment is not only frustrating and expensive, but the costs don't necessarily end there. Without tools most tradesmen are unable to work. If you don't work, you don't earn income.
There are a number of different types of tools insurance policies available. The most appropriate tools insurance cover for tradesmen is a policy that covers tools and stock (cabling, light switches, landscaping supplies etc) which may be held at home, on-site, in a vehicle, and in transit.
Who does it affect?
Where would you be without your most powerful tool? When a crucial tool or piece of equipment is stolen or damaged, work grinds to a halt, right along with your ability to make money..
So many tradesmen take the risk, don't have tools insurance, and end up regretting it.
Cheaper than you think
Many tradesmen are surprised to know that the replacement cost for a tradesman's tools can be $10,000 or more. It's a lot of money, and to spend that amount all at once is a very big ask.
Tools insurance is usually not taken out by tradesmen until they realise the benefits and with tax deductible annual premiums starting from just $180 for $5,000 worth of tools insurance cover, it's crazy not to have it.
You also need enough cover
It is good practice to keep a list of your tools on file which can be of enormous benefit if you need to claim. Over the years tradesmen accumulate tools and they often don't keep tabs on the value of their tools. Sometimes when we start asking about the types of tools they have, they begin to realise just how much gear they've collected and the potential cost involved in replacement if their tools are stolen or damaged.
Most policies have two sections, a Specified Items section and an Unspecified Items section.
It doesn't cost any more to specify the value of particular tools, but if they are unspecified items insured, the insurer will only pay a maximum amount per item regardless of whether the replacement cost is much higher. This varies between insurers from as low as $1,000 per item to $2,500 per item. This is important to check.
Tools insurance excesses can be from $100 to $500 depending on the insurer.
The tools insurance policy should also specify replacement of the tools at replacement cost value, rather than on existing values. Stock would be replaced at cost price.
Finally, no tools insurance policy covers every circumstance. For example, tools are not normally covered when they are left in the open or on site. It is very important to understand what you are covered for, what is excluded and what excesses apply.