Tools of trade insurance
Tools of trade insurance.
Your tools are how your business earns its living. Tools of trade insurance can help protect the portable tools and equipment your business relies on against accidental loss or damage, depending on the policy.
What is tools of trade insurance?
Tools of trade insurance is usually arranged as general property cover, often as part of a business insurance package. It can help cover the cost of repairing or replacing specified and unspecified business items, such as power tools, hand tools, test equipment and work laptops, following insured loss or damage during the policy period.
Cover can extend away from your main business premises, within the locations or geographical limits shown in the policy schedule, subject to the policy’s terms, limits and exclusions.
Situations it may help with
- Tools stolen from your locked work vehicle
- Tools stolen from a site
- Tools and equipment accidentally damaged
- Work laptops and other portable equipment stolen, or accidentally lost or damaged
Whether each of these is covered, and which other events are included, depends on the policy.
Specified and unspecified items
Specified items
Items listed individually in your policy schedule have their own sum insured. The most payable for each item is that individual sum insured, subject to the policy’s terms.
Unspecified items
Items not listed individually may be covered up to a per-item limit. Depending on the policy, this may be between $2,000 and $3,000 per item; check your schedule for the amount that applies. The schedule may also set an overall maximum for all unspecified items during the policy period.
Cover is subject to the relevant sum insured, individual item limits and any other policy limits. A higher total sum insured doesn’t remove a lower limit that applies to an individual item.
How a general property claim may be settled
For an accepted claim, the insurer may consult with you and choose a settlement method allowed by your policy. Depending on the policy wording and the circumstances, this may include:
- A cash payment: the amount calculated under the policy’s settlement basis, which may be replacement cost or the item’s value at the time of loss
- Repair: paying to repair damaged property to the condition required by the policy, without improving it beyond its condition or capabilities when new
- Replacement with a similar item: replacing lost or damaged property with a new equivalent with similar features and functionality, where the policy provides for this
- Part or component replacement: where only one part is damaged, paying the covered cost of repairing or replacing that part, including necessary dismantling and reassembly, rather than replacing the whole item
Example
Example scenario: a stolen tool bag
A tradesperson has a tool collection worth more than $10,000 and general property cover with a total sum insured of $50,000, subject to individual item limits. While working at a client’s site, their entire tool bag, containing several high-value tools, is stolen.
If the theft is covered, the insurer would assess the stolen tools against the policy schedule, including any amounts insured for specified items, per-item limits for unspecified items, overall limits and the applicable excess. The $50,000 total sum insured doesn’t mean every tool is covered for its full value. A tool worth more than its item limit may leave a shortfall.
This is a hypothetical example, not an actual claim or a guarantee of cover. The outcome depends on the policy’s terms, limits, exclusions, conditions and excess.
For businesses that rely on mobile tools and equipment, general property insurance can help reduce the financial impact of insured loss or damage and support continued operation after an unexpected incident.
Things to check in a policy
- Any exclusions or conditions for tools taken from unsecured locations
- Whether items need to be listed individually, and any limit per item
- Where your tools are covered: on site, in transit, or anywhere in Australia
- The excess you pay on a claim
General information only. What a policy covers depends on its wording, limits and exclusions. A broker will review your business before recommending any cover.
FAQs
Common questions
Is tools of trade insurance the same as general property insurance?
Tools of trade cover is usually arranged as general property insurance. General property is the part of a business policy that covers portable items you take from place to place, such as tools and work laptops.
Are my tools covered if they’re stolen from my ute or van?
It depends on the policy. Some policies have exclusions for tools taken from vehicles, or conditions that must be met for a claim. A broker can check what your policy says.
Does my home and contents insurance cover my work tools?
Home and contents policies may limit or exclude tools and equipment used for business. Check your policy, or ask a broker to review it.
Do I need to list every tool?
Not necessarily. Unspecified items may be covered up to a per-item limit, while higher-value items may need to be listed individually as specified items. A broker can help you set this up.
Does tools of trade insurance cover damage I cause to a customer’s property?
No. Damage to other people’s property relates to public liability insurance.
Talk to a broker about your business
Ask for a review of your existing insurance, or request a quote for new or changing cover.
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