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Tool Insurance

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Tool Insurance

Tool insurance is a specific type of cover that safeguards the tools and equipment crucial for your trade or business. These tools could range from hammers and drills to expensive machinery, specialist gear, or other business assets like handheld tools, power tools, ladders, and laptops.

Why is tool insurance important?

Just imagine a typical workday: you’ve got a job lined up, your team is ready, but when you reach for your toolbox, you find it empty. A moment of panic sets in as you realise your tools have been stolen. Without tools, the work can’t progress, deadlines could be missed, clients may become unsatisfied, and your reputation could be at risk. The financial burden of replacing the stolen tools could also set you back significantly.

Tool insurance mitigates these potential risks. It ensures that if your tools are stolen, lost, or damaged, you can claim the cost or value of these tools and get back to work without significant downtime or out-of-pocket expenses. Moreover, it provides essential financial protection against the repair and replacement costs, compensation for lost income, and additional expenses incurred due to delays, ensuring your business remains operational even in the face of such setbacks.

It’s crucial to have tools and equipment cover if your business:

  • Heavily relies on tools for operation.

  • Keeps tools overnight in vehicles

  • Owns high-cost tools and machinery.

  • Faces a financial strain in replacing tools.

What does tool insurance cover?

Tool insurance covers losses involving your tools. This includes:


Perhaps one of the biggest threats to your tools is theft. Tool insurance will cover the cost of replacing your tools if they are stolen, ensuring your business can continue operating smoothly. Whether the theft occurs on-site, in transit, or from a secured storage location, you can rest assured knowing your tool insurance has you covered.

Accidental damage

Accidents happen, even to the most careful among us. Your tools could be damaged in transit, on-site, or during operation. This type of insurance not only covers the repair or replacement cost of tools accidentally damaged in the course of your business operation but also helps cover costs associated with legal expenses, damage to property, and other business-related risks, such as defense costs, property damage, public liability, and business interruption.


In the hustle and bustle of daily operations, tools can sometimes go missing. If you lose your tools, the cost of replacing them could be significant. Tool insurance covers loss, meaning if your tools inexplicably disappear, you can claim their value and replace them swiftly.

How much does tool insurance cost?

Tool insurance premiums are calculated on several different factors including:

  • Limit of cover
  • Type of industry
  • Region of NZ
  • Claims history

Tool insurance in NZ typically costs between 4 – 5% of the value of your tools per year. 

Who needs tool insurance?

Any business or individual that relies heavily on tools for their work should consider tool insurance. This could include professions such as builders, plumbers, electricians, mechanics, carpenters, and landscapers, to name a few. If the loss, damage, or theft of your tools would cause significant financial strain and downtime for your business, then tool insurance is a sensible investment. Tool insurance is a critical part of business insurance for professionals relying on tools.

Yes, many tool insurance policies provide coverage for tools left in vehicles overnight, given that the work vehicle was securely locked. However, it is always recommended to check this with your specific insurer as policies can vary.

The process usually involves reporting the theft, loss, or damage to the police (if applicable), then contacting your insurance provider or broker with details about the incident and the tools involved. You may need to provide evidence, such as receipts or photos, to prove the ownership and value of the tools. Your insurer will then assess your claim and, if approved, arrange for reimbursement or replacement of the tools.

Top professions that need tool insurance

In New Zealand, tool insurance is a safeguard for many professions, especially trades against losses.

How do I get proof of tool insurance?

You can usually get proof of insurance same day when you purchase insurance through Gerrards. Once you have purchased your tool insurance policy, the insurer will provide you with a certificate of insurance. This document serves as proof of your coverage and details the terms of your policy, including the start and end dates, the covered risks, and the insured amount.

Acquiring a tool insurance policy from traditional insurance brokers may require a few weeks, a delay that could create problems for people or businesses who need instant insurance proof.

To obtain insurance coverage promptly, contact us. We may require you to provide some fundamental details about your business, such as:

  • The name of your business

  • The nature of your business activities

  • The type of work vehicle

  • The location of your building sites

  • The total number of employees

  • Predicted annual income

  • Years of experience in the industry

  • Qualifications

What does tool insurance not cover?

Tool insurance generally does not cover the below items. It’s important to read your policy wording to understand the exclusions that apply to your specific cover.

Wear and Tear

It’s important to note that while tool insurance covers a wide range of items, including power tools, it does not cover damage that occurs through normal use over time. This means that while your significant financial investment in power tools and other business equipment is protected against loss, damage, or theft, you’ll need to maintain them properly to avoid issues that aren’t covered.

Intentional Damage

If tools are intentionally damaged or misused, this will not be covered under a standard tool insurance policy.

Unreported Losses

If tools are lost or stolen and you do not report the loss to the police in a timely manner, your insurer may deny your claim.

Public Liability Cover

Protecting against accidental injury to a person and damage to someone else’s property, including property being worked on that is not owned by the insured party is not covered by tool cover. Instead a public liability policy will provide protection for this.

Other common questions about tool insurance

While not always required, it’s a good idea to create an inventory of all your tools, along with their value. This will help speed up the claims process if you need to replace them.

Most tool insurance policies do cover tools while they’re in transit. However, it’s essential to check this with your insurer as most policies vary in cover.

Some insurance policies do cover hired-in equipment or tools. Always check with your insurance broker or provider to ensure this coverage is included in your policy.

“Replacement value” means the insurer will pay the cost to replace the tool with a new one of similar kind and quality. “Actual cash value” takes into account depreciation, meaning you’ll get the amount the tool is worth at the time of the loss, not the price to buy a new one.

This depends on the specifics of your policy. Some policies do cover tools owned by your employees, while others only cover tools owned by the business. Always check with your insurance broker or provider to clarify this.

No, tool insurance cannot cover legal costs related to accidental injury, damage to property, and defense costs for legal actions. This also doesn’t  include coverage for damages to underground facilities and property being worked on. This is insteasd covered by public liability insurance. 

Public liability insurance is crucial for businesses, including tradesmen, mechanics, and sole traders, as it protects against claims of property damage or injury to members of the public caused by business activities. This insurance is essential for mitigating potential risks and financial burdens associated with such claims.

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