INSURANCE ON TOOLS
Time spent on arriving at an accurate sum insured on tools will pay huge dividends in the unfortunate event of a claim and save a lot of heartache.
Years ago most tools were mounted on workshop walls so quite accessible to thieves but time consuming to steal. The introduction of high quality tools like Snap-On with their purpose built tool boxes, often on wheels changed all that.
Values of tools escalated rapidly but so did thefts and security had to be increased. Most insurers require toolboxes to be secured to the fabric of the building even when there is an alarm. For very high values a purpose built alarmed cage is sometimes required. If a loss does occur insurers may look for some confirmation that protections were in force so it’s a good idea to take a phone photo of the set up.
Historically the business will own the machinery and plant and a number of tools, usually the more expensive ones, mechanics will have their own tools but will find it difficult/expensive to insure them separately as Household insurers will not extend their policies.
Both the business and the employees should have an inventory of their tools and their current replacement value. Receipts for purchases should be retained wherever possible. For insurance purposes tools are described as Portable Hand Tools which includes powered hand tools. Many tool kits will have been built up over the years and it is a good idea to get the local tool salesman to review the values on the inventory.
In the event of a loss insurers will look for verification of what was stolen so in addition to the inventory it’s a good idea to take photos of the tools in each layer of the box.
Values between employees will vary considerably so your broker should be advised of the amount for each employee and also the figure for the company to ensure that the proper cover is in place.
Most employers realise that if the employees tools are stolen they will not have the wherewithal to buy new ones and will be unable to work so they insure them for the employee. Some businesses pass the cost onto the employee, others pay the cost themselves but this would almost certainly be regarded as a benefit in kind by HMRC.
This requires a bit of effort to organise and most people just think a Fire or Theft will not happen to them but if it does then getting the cover on the right footing from the outset will produce a much quicker and painless claims settlement.