Tools and Equipment Insurance for UK Tradespeople: What You Need to Know Before You Buy

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Your Tools Are the Business

Lose your kit to theft or damage and you are off the job within hours. Plenty of tradespeople assume their public liability policy has it covered. It does not, and the gap usually surfaces at the worst possible moment.

This covers what tools insurance actually does, the exclusion that declines more claims than any other, how settlement is calculated, and the practical steps that decide whether a claim pays out properly.

Why Public Liability Does Not Cover Your Tools

Public liability protects you when a third party is injured or their property is damaged because of your work. It covers your liability to other people, not the loss of your own property.

If a customer trips over your drill and breaks a wrist, public liability responds. If someone walks off with that drill, it pays nothing.

For your own kit you need either a standalone tools and equipment policy, or a combined tradesperson policy with a separate tools section alongside public liability, employers’ liability and anything else you carry.

The Overnight Vehicle Exclusion

If you read one section, make it this one. Theft from an unattended vehicle overnight is excluded by most tools policies unless specific conditions are met, and brokers consistently name it as the commonest reason claims fail.

What the Wording Usually Says

Policies vary, but expect some combination of:

• An overnight exclusion by the clock. Many policies simply exclude theft from a vehicle between defined hours, commonly something like 9pm to 6am, unless the vehicle is somewhere specified.
• Where the vehicle is kept. Cover overnight may require a locked garage, a secure compound or other specified premises. A street or an open driveway is often not enough.
• Security on the van. Deadlocks, slam locks or an approved alarm are frequently required, sometimes professionally fitted or to a recognised standard. This is worth doing anyway: better van security both deters thieves and improves the terms available to you.
• Evidence of forced entry. Most policies require signs of forcible and violent entry. This is the modern trap: relay and key-cloning attacks leave no damage, so a van opened electronically can produce a claim with nothing to show an insurer.

What to Do Before You Buy

Read the overnight section line by line and put the question to the insurer or broker in writing:

If my tools are stolen from my locked van on my own driveway overnight, am I covered?

Get the answer in writing. If it is no, or yes with a page of conditions, factor that into the decision. Specialist trade insurers do offer better overnight terms, usually at a higher premium or in exchange for specified van security.

How Much You Actually Get Paid

New-for-Old or Indemnity

New-for-old pays the cost of a new equivalent, which is what you want.

Indemnity deducts for wear and tear based on age and condition, so an older tool produces a payment well below replacement cost.

Some policies default to indemnity unless you ask and pay for new-for-old. If your kit has a few years on it, that difference decides whether you can replace what you lost or have to find the shortfall yourself.

Single-Item Limits

Most policies cap the payout for any one item regardless of what it cost, often somewhere in the hundreds to around a thousand pounds.

That matters if you own anything expensive. A professional laser level, a generator, a compressor or a specialist power tool can be worth several times a standard single-item limit. Items above the cap can usually be listed individually, sometimes called specified or scheduled items, for an additional premium.

Go through your kit, find everything worth more than the prospective limit, and sort it before you buy rather than after a break-in.

Underinsurance and Average

Declare the full replacement value of everything, because most policies apply average if you under-declare: the payout is reduced in proportion to the shortfall.

Declare £5,000 when the kit is actually worth £10,000 and a £2,000 claim may pay £1,000. Review the figure annually and whenever you buy something significant.

Hired-In Plant

If you hire a mixer, a mini-digger or an access platform, you are usually liable for loss or damage under the hire agreement.

Many tools policies exclude hired-in plant unless you add it. The hire company will offer a damage waiver, which is convenient and often expensive relative to what it covers. If you hire regularly, ask whether your own policy can cover it more cheaply, and check the limits before relying on it.

Keep an Inventory

The insurer will ask you to prove what you owned and what it was worth. Without records you end up arguing about both and settling for less.

Record for each item:

• Description, brand and model
• Serial number, usually stamped on a plate or under the battery
• Purchase date and price, with the receipt or a card statement
• Current replacement cost, updated occasionally

Photograph everything, including close-ups of serial numbers, and keep the file somewhere other than the van: cloud storage, emailed to yourself, or on your phone.

Registering power tools on a property database such as Immobilise is also worth the time, since it helps police return recovered kit to the right owner.

For a theft claim you will need a police crime reference number, so report it immediately rather than after you have finished tidying up.

Other Things to Check

What counts as a tool. Some policies define it narrowly as hand tools and portable power tools. Others include stock, materials, trade-specific equipment and workwear. A plumber, an electrician and a groundworker carry very different things, so confirm yours are in scope.

Tools left on site. Many policies exclude kit left unattended on an open site, or impose conditions such as a locked container. If you leave gear on site overnight, this matters as much as the van clause.

Employees and subcontractors. Some policies cover tools only while used by the policyholder. If your team or regular subcontractors use your kit, confirm it explicitly.

Geographical limits. Most policies cover mainland UK. Check before working in Northern Ireland, the Republic of Ireland or offshore.

Excess. A cheaper premium usually means a higher excess, and with tools, where individual claims are often modest, a high excess can make claiming pointless.

A Tax Note Worth Raising With Your Accountant

Two things follow a tools claim. The replacement kit is generally deductible or qualifies for capital allowances in the usual way, and the insurance payout itself is usually taxable, either as a trading receipt or as a disposal for capital allowances purposes depending on what was lost.

It rarely changes the decision to claim, but it does change the numbers, so mention it to your accountant rather than assuming the payout is tax-free.

FAQ

Can I add tools cover to my public liability policy?

Often, as an optional section on a combined tradesperson policy. Ask your current insurer, then compare the total against standalone specialist cover, because combined is not automatically cheaper.

What if I underestimate the value of my tools?

Average applies and your payout is cut in proportion. Declare honestly and review annually.

Are tools covered when my employees use them?

It depends on the wording. Some policies cover use by employees in the course of work, others only the policyholder. Confirm it if anyone else touches your kit.

Do I need to tell the insurer when I buy expensive tools mid-policy?

Yes. Notify them and update the declared value. A new high-value item may otherwise be uninsured, and it pushes you towards underinsurance on everything else.

My van was opened without any damage. Am I covered?

Possibly not. Most policies require evidence of forcible and violent entry, and relay theft leaves none. If you rely on van security, ask specifically how the policy treats keyless theft before you buy.

Tools and Equipment Insurance: The Bottom Line

Public liability does not cover your own kit, so you need a tools section or a standalone policy.

Read the overnight vehicle wording before anything else, including what it says about forced entry, because that clause decides most declined claims.

Then push for new-for-old settlement, check single-item limits against your most expensive kit, declare the full replacement value so average cannot bite, and spend an afternoon building an inventory with serial numbers and photographs.

A specialist trade broker is worth the conversation here. The differences between these policies live in the conditions rather than the headline price, and a comparison site will not surface them.

This article is general information about insurance in the UK, not advice, and it does not take account of your circumstances. Policy wordings, conditions and exclusions vary considerably between insurers. Speak to an FCA-authorised broker or insurer before relying on anything here, and to a qualified accountant about the tax treatment of any claim.