What Is Tool Insurance?
“Tool insurance” is a common description rather than one universal product name.
Similar cover may be called:
Portable equipment cover
General property cover
Tools of trade cover
Plant, tools and equipment insurance
Property away from the premises
The Australian Government’s business insurance guidance describes portable equipment insurance as cover for accidental loss, damage or theft of tools and electrical equipment taken to jobs.
Two policies can use similar labels while having different limits, locations, security conditions and settlement methods.
What May Be Covered?
Subject to the wording, tool insurance may cover theft, accidental damage, fire, storm, damage in transit or other insured events.
It may apply to hand and power tools, batteries, press tools, drain cameras, locators, testing equipment, ladders, small plant and portable electronic equipment.
Cover may apply at the business premises, at a job site, in transit or in a vehicle. It should not be assumed that every location is included.
The Insured Amount Is Not Always the Payout
The total insured amount is only one part of a claim.
The outcome may also depend on single-item limits, the excess, security conditions, the settlement basis, evidence of ownership and whether the item was covered at that location.
Policies may settle tools on a replacement, new-for-old, market-value or indemnity basis.
Replacement value generally refers to replacing an item with a new equivalent. Indemnity or market value usually accounts for age, condition, wear and depreciation.
A three-year-old tool bought for $1,500 may therefore produce a lower settlement under an indemnity-value policy.
Theft From a Ute Is Where the Detail Matters
Many plumbing tools spend more time in a ute than at a fixed premises.
A policy may include conditions about:
Whether the vehicle and storage compartments were locked
Whether tools were visible
Evidence of forced entry
Where the vehicle was parked
Overnight storage
How long the vehicle was unattended
One policy may cover theft from a locked vehicle but apply a lower limit. Another may require visible evidence of forced entry. Another may exclude tools left in a vehicle overnight unless particular conditions are met. The words “theft covered” do not answer the whole question.
For a claim scenario, see What Happens If Plumbing Tools Are Stolen From a Ute?
Tool Cover and Vehicle Insurance Are Separate
A work ute and the equipment inside it are different assets.
Commercial vehicle insurance generally deals with loss of or damage to the insured vehicle. It does not automatically cover loose tools, stock, materials or equipment carried in the tray or canopy.
Those items may need a separate property or portable-equipment section.
For more detail, see Commercial Vehicle Insurance for Plumbers: Why a Work Ute Is Different.
What May Not Be Covered?
Depending on the policy, problems may arise where:
The item was not owned by the insured business
A high-value item was not specified
Tools were left unsecured
Required evidence of forced entry was absent
The item was misplaced rather than stolen
Wear, deterioration or breakdown caused the damage
The property was outside the covered area
Ownership or value could not be established
Mechanical breakdown can also differ from accidental damage. A drain camera dropped and smashed presents a different issue from one that gradually stops working.
Hired, Borrowed and Subcontractor Tools
Ownership matters.
A policy may cover property owned by the business, hired by it, held in its custody or only shown in the schedule.
A hire agreement may make the plumbing business responsible for loss or damage even where its insurance does not respond.
Subcontractor tools are separate again. The main business’s policy does not automatically cover a subcontractor’s equipment, and the subcontractor’s policy does not automatically cover the main business’s property.
See Plumbers and Subcontractors: What Can Go Wrong -And Who Is Responsible?
What Evidence May Be Requested?
An insurer may ask for information to establish the event, ownership and value, including:
Purchase invoices or supplier statements
Bank transactions
Serial numbers and photographs
Asset or depreciation registers
Police event details
Images of damaged locks or canopies
A list of missing items
Missing receipts do not necessarily decide a claim, but they can make ownership and value harder to establish.
A Real-World Example
A plumber parks a locked ute in the driveway overnight. Someone forces open the canopy and removes tools, batteries, a press tool and a drain camera.
The vehicle policy may consider the damaged canopy. The tool section may separately consider the stolen equipment.
The insurer may review the vehicle-theft conditions, evidence of forced entry, overnight-cover rules, total and single-item limits, whether the drain camera was specified, proof of ownership, the excess and settlement basis.
The claim could be accepted, partly accepted, limited or declined.
The outcome depends on the wording and facts, not simply the label “tool insurance.”
Questions to Consider When Reviewing Tool Cover
Useful factual questions include:
Which tools and locations are covered?
Are tools in a ute covered during the day and overnight?
What security and forced-entry conditions apply?
What are the total and single-item limits?
Which equipment must be listed separately?
Are hired or borrowed tools included?
Is accidental damage included?
Is breakdown excluded?
Is settlement based on replacement or indemnity value?
What evidence and excess apply?
For broader comparison issues, see How to Compare Plumbing Insurance Quotes.
Key Takeaways
Tool insurance may also be called portable equipment, general property or tools-of-trade cover.
Specified and unspecified tools can have different limits.
Theft from a ute may be subject to security, overnight-storage and forced-entry conditions.
Commercial vehicle insurance does not automatically cover tools inside the vehicle.
Hired, borrowed and subcontractor-owned equipment may be treated differently.
Replacement and indemnity settlements can produce different outcomes.
Invoices, serial numbers, photos and tool registers can help establish ownership and value.
Frequently Asked Questions
Does public liability insurance cover stolen plumbing tools?
Generally, no. Public liability is aimed at certain third-party injury and property-damage claims. Stolen tools usually require relevant property or portable-equipment cover.
Are tools automatically covered when locked in a ute?
No. Cover may be subject to vehicle, security, location, overnight-storage and forced-entry conditions.
Do I need to list every plumbing tool?
Not necessarily. Some policies provide unspecified cover, but expensive items may need to be individually listed because of single-item limits.
Can older tools be covered without receipts?
Possibly. Other evidence may include bank statements, supplier histories, photos, serial numbers or tax records. Requirements vary.
Does tool insurance cover accidental damage as well as theft?
It may, depending on the policy wording. Some tool-insurance sections include accidental damage as well as theft, while others apply different insured events, limits or exclusions.
Are batteries and chargers treated the same as plumbing tools?
Not always. Batteries, chargers and accessories may be covered, but they can also be subject to separate limits, definitions or evidence requirements under the policy.
