Tools insurance
See how different types of business insurance can help protect your tools
How tools insurance works in Australia
Tools insurance is a specialised form of Australian business insurance that’s designed to cover the financial impact of loss, accidental damage or theft of your tools and equipment. It can be seen as an essential investment to safeguard your business, whether you’re a sole trader, small business, or large-scale trade business.
This business insurance can cover companies and tradies that rely on tools to operate, including carpenters, plumbers, electricians, mechanics, landscapers and more that rely on tools of trade as essential for earning a living.
This type of insurance typically covers:
- Theft, including from vehicles or locked storage
- Accidental damage, such as dropping a tool or crushing it onsite
- Loss; for example, if tools go missing while working on a busy job site
- Insured events such as fire and storm damage that destroy the tools stored securely.
It’s especially important for tradies who work on the move to have tools insurance as they bring their tools to different job sites throughout the week. Tools insurance can bring relief, helping you get back to work faster if something goes wrong.
How can I get tool insurance?
Tools and equipment can be covered under different types of insurance policies, depending on how and where you use them. If your tools are stationary, kept in a workshop or commercial building, various types of business insurance may apply.
Each policy type has its own set of inclusions and exclusions; therefore, always read the policy wording on the Product Disclosure Statement(PDS) and the Target Market Determination (TMD) to know the inclusions and exclusions of your business insurance policy, and that the policy is the right fit for your business.
Here’s a breakdown of common types of cover:
Business property insurance
Covers physical commercial property damage caused by insured events like fire, storm, vandalism, or flood. It can sometimes extend to the items within the building, but it’s designed more for fixed infrastructure than movable tools.
Business contents insurance
This policy protects the contents inside your registered business premises, including equipment, furnishings, and tools, which are kept within the insured building. It can offer cover for theft, accidental damage, and loss, but usually only when the tools are stored onsite.
Machinery breakdown insurance
Machinery breakdown cover helps protect your business when critical equipment fails due to electrical or mechanical faults. It’s more relevant for fixed industrial tools or machinery, such as compressors or generators, than handheld trade tools.
Electronic equipment cover
For businesses that rely on laptops, mobile phones, testing instruments or diagnostic gear, this cover covers electronic equipment for costs and repairs from sudden breakdowns or damage. It can be a valuable add-on if you use expensive electronics in the field.
Portable tool insurance
If your tools move with you from job to job, you will instead need to consider portable equipment cover. This type of insurance can cover the loss, destruction, or theft of these belongings, protecting your tools while you’re on the move.
Depending on your level of cover, portable equipment insurance can cover a variety of items that travel with you, such as tradie tools, power tools, portable electronics (e.g. laptops and mobile phones), more traditional instruments (e.g. knives and crowbars) and much more.
However, as the name suggests, portable equipment does not cover fixed items onsite at a business’s centre of operations. Also, policies may not cover equipment and tools attached to your motor vehicle (e.g. heavy lifting tools). However, this will vary by policy and insurer.
This cover is designed specifically for mobile tools and equipment, and it can insure items against loss, theft, or accidental damage while in transit or onsite. Coverage usually applies whether the tools are being used on a worksite, kept in your vehicle or in secure storage or a toolbox.
Who is portable tool insurance for?
Portable tools cover is ideal for anyone who relies on tools to do their job, especially tradespeople who move from site to site. This includes:
- Qualified tradies (e.g. electricians, plumbers, carpenters)
- Apprentices and subcontractors
- Mobile mechanics and technicians
- Landscapers and outdoor maintenance crews
- Specialist contractors and service providers.
What does portable equipment insurance cover?
Depending on your level of cover, this insurance can apply to:
- Power tools (e.g. drills, saws, grinders)
- Hand tools (e.g. spanners, hammers, knives)
- Portable electronics (e.g. phones, laptops, testing devices)
- Toolboxes and kits
- Measuring equipment
- Safety gear and accessories.
However, this cover may not apply to certain items such as tools permanently fixed to a motor vehicle (e.g. cranes, hoists), equipment left unsecured or stored in unlocked vehicles, or heavy machinery and plant equipment (covered under separate policies).
Can I take out a standalone tool insurance policy?
Portable equipment cover can be taken out as a standalone policy. For many sole traders or subcontractors, this may be all you need, especially if you’re not required by law or contract to have broader coverage.
However, there’s much risk involved in running a business. As such, it’s worth considering different types of cover to protect yourself more comprehensively.
Read the policy documents, such as the PDS and TMD, when getting your insurance product to know what is included and excluded in your insurance policy.
Tips on how to protect your tools
Your work represents a considerable part of your life, which makes protecting that livelihood all the more important. Taking out the right tools insurance policy is one of the smartest moves you can make as a tradie or small business owner. 
Always compare different insurance providers and types of cover to get the best cover available for your financial budget; you can use our business insurance comparison service to get an insurance quote.
Even with insurance for tools, you still need to take reasonable steps to safeguard your equipment, as most insurers expect you to act responsibly. To avoid claim denials, consider:
- Locking tools in a secure toolbox or locked vehicle
- Installing alarms or GPS tracking in work vehicles
- Keeping proof of purchase and taking photos of your tools
- Using tool registers to track your inventory
- Engraving or marking tools with identifiable information.
Depending on your insurance policy, insurers may refuse claims if there’s no evidence of forced entry or if the tools were left unsecured.
What other types of insurance should I consider?
Running a trade business involves more than just tools. Depending on your business and your insurance cost budget, you might also want to explore these other general insurance options to protect your business:
Public liability insurance
Covers you for liability if a third party (e.g. client, passerby, or contractor) is injured or has their property damaged due to your work. This can cover legal fees, compensation payouts and more.
Professional indemnity insurance
This insurance covers legal costs and damages if you’re found liable for a mistake or omission and is important to consider if you give professional advice, consulting, or technical recommendations.
Personal accident insurance
If you get injured (on the job or elsewhere) and can’t work, this cover can provide a weekly income while you recover, helping you stay afloat financially.
Commercial vehicle insurance
Your ute or work van probably carries thousands of dollars in gear. This insurance can cover the vehicle itself and may also offer optional tool coverage.
Meet our business insurance expert, Adrian Taylor
As a General Insurance expert with over 13 years’ experience in financial services, Adrian Taylor strongly believes in the protection and peace of mind that all types of business insurance provide business owners. Adrian says this type of cover can be the difference between a business staying afloat and going under if trouble arises.