3 Questions to Ask Before You Take out Trade Tools Insurance

Your tools are one of your biggest assets. They may be worth a fair amount of money, and as a tradie, you simply cannot work without them.  So, it makes sense to take out a tools of trade insurance policy to protect yourself financially, in case they are stolen or damaged.

To help you understand what to look for in a policy and how its terms and conditions may affect any claim you make, make sure you ask your broker the following questions.

1. How much coverage do I get?

You can insure your tools for different amounts, although some policies may have limits and would need to be specified separately.  You should also remember that insurance companies can pay out in a couple of different ways - you may get new-for-old protection or coverage based on depreciation.

If you take a new-for-old option, the insurer pays the amount it would cost to buy a new tool.  If your policy works on a depreciation basis, then you get the value of the tool at the time of the claim.

Tools lose value as they age, so you won't necessarily recover the full costs of a new replacement if you're paid on a depreciation scale. If you can cover any shortfall or source the tool at the lower price, then this isn't a problem.  If this would be a strain on your finances, then new-for-old is a better option.

Also, remember that you won't usually receive the full amount of any claim.  Your policy will have an excess figure.  For example, if your excess is $500 and you make a claim for $800, then your insurer deducts the excess from your payment.  You would receive $300.

It's important to get the right excess here.  If you can afford a higher excess, it may reduce your premium costs; if you want a lower sum, your policy may be more expensive.

2. Which tools does the policy cover?

While you lump all your tools together to create an overall valuation, insurers usually treat higher-value pieces differently.  You may need to submit a list of tools that are worth more than a set figure.

So, if the insurance company sets a limit of $2,500, then you have to tell them which of your tools are worth this amount or more.  If you don't do this, then you may not receive the full value of these tools in a claim.

You also need to consider which tools to protect. For example, some insurers include technology items that you use as part of your job, such as mobile phones, cameras and diagnostic devices.  If you use these devices, you need a policy that protects them too.

Bear in mind that there may be times when you use tools that you don't own — you may hire them.  If you do this regularly, then a policy that adds hire tools to the mix is worth looking at.

3. What are the key restrictions?

Tools insurance policies come with some restrictions that affect your ability to make a claim.  For example, if you have theft coverage, then a basic policy may cover you for tools stolen from your workshop, if you can prove forced entry.  However, you may not be able to make a claim if your tools were stolen from your ute or a job site, unless you choose a more comprehensive package.

Or, basic accidental damage benefits will pay out if your tools are damaged in a car accident, say if you have a collision.  However, your policy might not pay if you drop a tool and damage it accidentally, unless you boost your coverage.

Sometimes, it pays to go beyond the basics.  Think about where you use your tools and how you store them.  This helps you avoid restrictions that could affect future claims.

For expert advice, contact Westralian Insurance. With our help, you'll get the right levels of coverage to protect your tools as effectively as possible