Tools insurance

Why protecting your kit matters

Tools insurance is designed to cover the cost of repairing or replacing your work tools if they are stolen, accidentally damaged, or lost. For many tradespeople and small firms, tools are the lifeblood of the job. Without them, work stops and income can be at risk. In Great Britain, SMEs make up the vast majority of businesses, yet a large share operate with little or no insurance in place. That leaves many exposed when things go wrong, especially given the rising cost of claims across parts of the market and the continued pressure on repair and replacement prices.

This guide sets out how tools insurance works, what it typically covers, and where the common gaps sit. You will find it useful whether you are a sole trader with a single van or a growing team with multiple vehicles and sites. We focus on plain English and practical detail so you can weigh up whether this cover fits your needs and budget. We also explain how to avoid common pitfalls, such as overnight storage conditions and proof of ownership, which can affect whether a claim is paid.

Insurance can stabilise cash flow after a loss, but it is not a blank cheque. Theft from unattended vehicles, wear and tear, and cosmetic damage are common exclusions. Understanding these limits upfront will help you choose a policy that genuinely supports continuity of work without paying for features you will not use. Rates in the UK have generally become more competitive in some lines, while casualty-related risks and motor-linked costs remain under pressure. That mixed backdrop makes it even more important to compare terms carefully and prioritise solid risk management alongside the right cover.

Losing essential tools for even a day can derail jobs, schedules, and client confidence.

What is covered and how claims usually run

A typical tools insurance policy covers portable hand tools and power tools you use for your trade. Cover usually applies at your premises, on the job, and in transit. Theft and accidental damage are the core features. Some policies extend to hired-in equipment, stock, or plant, and offer options for overnight cover in a locked vehicle. Claims are settled on either a new-for-old or indemnity basis, depending on the policy wording and the age of your tools.

There are important limits and conditions. Many insurers require evidence of forcible and violent entry if tools are stolen from a vehicle. Others stipulate approved locks, alarms, or that tools must be removed from vans overnight unless you have purchased an enhanced overnight extension. Wear and tear, gradual deterioration, and manufacturer defects are usually excluded. If you lend tools to someone outside your business, cover may not apply unless they are an employee or authorised user.

Here is a simple example. Your van is broken into at a site car park during working hours and your power tools are stolen. If you can show proof of purchase, serial numbers, and evidence of forced entry, a valid claim would likely be settled up to the policy limit minus the excess. By contrast, if the same theft occurs overnight outside your home and the policy excludes overnight vehicle cover, the claim may be declined. Fast, clear documentation at claim stage helps speed decisions and reduces disputes.

Who benefits most from this cover

Tools insurance is particularly useful for trades and professions that rely on portable kit: builders, carpenters, electricians, plumbers, heating engineers, roofers, landscapers, cleaners, and mobile technicians. It also supports SMEs with multiple vans or teams moving between jobs, where theft or accidental damage can disrupt schedules and revenue. If you use hired-in equipment or specialist tools with high replacement costs, tailored limits and add-ons can make a material difference.

Those who store all tools in a secure, alarmed workshop each night, rarely transport them, and have low exposure to third-party sites may feel the risk is manageable without separate tools cover. If your home insurance already lists and covers trade tools at the correct values and locations, separate policies might be unnecessary. Balance the premium against the genuine risk of interruption and the time it would take to replace essential kit.

Cover levels and add-ons at a glance

1. Essential

   • Designed for sole traders with a single van and modest tool values.
   • Covers theft and accidental damage during business hours and at your premises.
   • Lower single-item and total limits, standard excess, minimal add-ons.

2. Standard

   • Suits small teams or mixed tool sets with higher aggregate values.
   • Includes theft from vehicles during the day with forced entry conditions.
   • Optional overnight vehicle extension and hired-in equipment cover.

3. Comprehensive

   • For SMEs with multiple vehicles, high-value kit, or specialist tools.
   • Higher single-item limits, choice of new-for-old or indemnity settlement.
   • Broader territorial limits, accidental damage, and downtime hire reimbursement options.

4. Optional add-ons

   • Overnight vehicle cover with specified security requirements.
   • Hired-in plant and equipment with continuing hire charges protection.
   • Business interruption for loss of tools causing delayed completion.
   • Stock and materials cover in transit and on site.
   • Legal expenses and professional indemnity for advice-related exposures.
   • Cyber cover if tools incorporate connected devices or you hold client data.

Match limits to real replacement costs. Underinsurance is common and can reduce claim payouts.

What it costs and what drives the price

Typical ranges and the main pricing drivers vary by insurer and region. Prices below are indicative only.

Other influences:

• Claims environment and inflation can lift repair and replacement costs.
• Competitive market cycles may reduce rates for some lines while casualty and motor-linked risks remain firm.
• Electric and specialist tools can be more expensive to replace, affecting sums insured.

Who can apply and common checks

Most UK-based sole traders, partnerships, and limited companies can apply if their business activities are within the insurer’s accepted trades. Insurers will ask for your trading address, a list of tools with values, storage locations, and security measures. They may request proof of purchase or serial numbers for higher-value items and will expect you to keep records up to date.

Restrictions often apply to overnight storage in vehicles, the use of unoccupied sites, or work in high-risk locations. Applications can be declined for a history of frequent theft claims, inadequate security, unclear ownership, or undisclosed convictions. Being precise about who owns the tools and where they are kept will improve your chances of suitable terms and a smooth claim if needed.

From quote to claim in simple steps

1. Gather tool values, serial numbers, and storage details for an accurate quote.
2. Compare limits, single-item caps, and settlement basis across policies.
3. Choose add-ons like overnight vehicle cover only if you need them.
4. Set realistic sums insured to avoid underinsurance penalties at claim time.
5. Buy the policy and store documents and receipts securely, ideally digitally.
6. Improve security with approved locks and alarms to support conditions.
7. Report losses to the police promptly and notify your insurer without delay.
8. Submit proof of ownership and photos to speed assessment and settlement.

The upsides and the trade-offs

Key checks before you commit

Read the schedule and wording closely. Look at excesses, single-item limits, and whether settlement is new-for-old or based on current value. Note any conditions around overnight storage, approved locks, alarms, or removing tools from vehicles. Confirm how theft from a site, a shared lock-up, or a home garage is treated. Check renewal terms, as premiums can change with market conditions or claims. Keep receipts, serial numbers, and photos to reduce friction if you claim.

Alternatives and related cover

1. Public liability insurance - protects against third-party injury or property damage caused by your work.
2. Employers’ liability - a legal requirement if you employ staff, even part-time or temporary.
3. Professional indemnity - for design or advice-led trades where error could cause financial loss.
4. Commercial vehicle insurance - covers your van, with options for in-vehicle equipment limits.
5. Contract works insurance - protects building works and materials on site during construction.

FAQs

Q: Are tools in my van covered overnight? A: Only if your policy includes an overnight vehicle extension and you meet security conditions. Many standard policies exclude overnight van cover unless you buy this add-on.

Q: Do I need receipts for every tool? A: Insurers often require proof of ownership for higher-value items. Receipts, serial numbers, and photos help. Lack of evidence can slow or reduce a claim, especially for newer purchases.

Q: Is accidental damage included as standard? A: Often yes, but check the wording. Some policies limit accidental damage to specific scenarios or exclude cosmetic damage that does not affect function. Clarify this before buying.

Q: Can I cover hired-in equipment? A: Many policies offer a hired-in plant extension that can include continuing hire charges if items are lost or damaged. You will need accurate hire agreements and declared values.

Q: Will my home insurance cover trade tools? A: Some home policies exclude business use or set low limits. If your tools are essential for work, a dedicated tools policy with appropriate limits is usually safer and clearer.

What to do next

Take a few minutes to list your tools, values, and where they are stored. Compare policies on limits, exclusions, settlement basis, and any overnight conditions. Choose only the add-ons you will actually use. A focused, like-for-like comparison will help you secure suitable protection at a fair price without overbuying.

Important note

This guide is general information, not personal financial advice. Policy terms, limits, and exclusions vary by insurer. Always read the schedule and wording carefully and confirm details before you buy or renew.