Tools are a tradesperson’s livelihood. When a plumber, electrician, gardener or mechanic has their kit stolen, they lose the cost of replacing it and the income from every job they can’t do in the meantime. That’s why they take out insurance. Yet tool theft claims are often reduced, delayed or rejected because the claimant can’t prove what was taken, and it’s a widespread gap: almost six in ten tradespeople* whose biggest worry is lost income have no proof of ownership for their tools at all.
The problem with proving ownership
Around 83% of tradespeople have no readily available proof of ownership for their tools. Without receipts, invoices, serial numbers, or photographs, an insurer has little evidence to support a claim. And realistically, who photographs every tool they buy?
There aren’t many tradespeople who purchase their entire kit in one go. Tools are collected over years, making receipts just as difficult to keep track of. It’s hugely frustrating and worrying. You know you’ve owned and used the tool for years. You just don’t have any proof.
And that worry is amplified for those who are already concerned about the impact theft will have on their income. According to our recent research, out of the tradespeople whose primary worry is lost income, 59.4% (19 out of 32) say they have no proof of ownership at all, which makes the anxiety so much worse. They’re not only facing the prospect of being unable to work in the immediate term after a theft, they’re by no means certain that they’ll ever receive an insurance payout to replace the equipment they need.
Don’t let your cover fall behind.
And then we come to the problem of underinsurance. When your kit grows gradually, it’s easy to miss that its value has increased too. Especially if you’re replacing worn-out tools. But with everything else, costs go up, so even buying like-for-like, you can find yourself spending more. Especially if you add in specialist equipment bought for a new type of work.
If your policy is based on a declared value that is lower than the actual cost of replacing your equipment, you’re always going to struggle. But that’s not the only concern, because depending on the policy terms, proportional settlement may reduce your claim even further.
That’s why insurance renewal should never be viewed as a simple box-ticking process. Every year, you need to actively review what your policy covers, go through your tool inventory, and update the value of your cover. And that may mean that your premium increases too. But without that, you’re paying for a policy that has no chance of protecting you.
The reality of underinsurance
David Dawes is an electrician from Stevenage. His van was broken into overnight, and around £9,000 worth of tools were stolen. When David took out his insurance four years earlier, he’d requested £5,000 of cover. He renewed it every year, but didn’t consider whether the value of his equipment had changed. While he had receipts for a couple of major purchases, other bits had been picked up incrementally; some had been bought from a friend leaving the trade, others had been inherited from his father, or purchased from Facebook. And he had no evidence of it.
With his declared value well below the actual replacement cost, the claim was also subject to proportional settlement. This left him with a payout that covered only a fraction of what he needed. And that’s a frightening place to be in.
What should you actually record?
The whole point of insurance is that it’s there when you need it. And it should cover everything, so you’re never left out of pocket. You can even add in loss of earnings, if you’re savvy. But insurance only works when it’s used properly, and that means keeping your records up to date. Both in terms of inventory and policy information.
And the thing is, creating an inventory doesn’t need to be complicated. For each item, you just need to record:
- A clear photograph
- The make and model
- The serial number
- The purchase date
- The purchase price, where available
- The current replacement value
- A copy of the receipt or invoice
For expensive equipment, records of servicing and maintenance can also provide useful supporting evidence. And you can do all of that in a Word document or spreadsheet. As long as you keep it current, it’s enough. Just make sure that you store the information away from your tools. Cloud storage is the best idea, but keeping backup copies at home can be enough.
Technology can help
While a spreadsheet may be all you need when you’re just starting out, dedicated asset-management systems can make things easier as your business grows. Combining your inventory with photographs, receipts, and other records, they provide an easily auditable account of your tools. Some also offer location tracking and movement alerts, so you can see when equipment has moved unexpectedly. And if your tools are compatible, certain systems can even provide remote disabling, making your stolen equipment harder to use or resell.
Insurance starts before the theft
Insurance can be invaluable. But if you’re not going to comply with the details of your policy and keep your records updated, there’s little point in paying for it. So, check the security requirements in your policy and make sure you follow them, particularly when tools are left in vehicles overnight. Make sure the amount you are insured for reflects what it would actually cost to replace your kit today. And keep evidence of what you own.
Tool theft is a growing problem, with insurers reporting a 54% increase in claims in recent years. Even with a significant number of incidents never being reported. If you can’t afford to lose your tools, you have to take steps to protect them. And ten minutes spent updating your inventory each month is a small investment compared with all the loss that can come from a theft.
Paul Harvey, Operations Director at Kynekt, an equipment protection and theft deterrent platform built for the construction sector.
*https://kynekt.id/proof-of-ownership-for-tools-the-complete-guide-for-trades-businesses/