Portable Hand Tools Insurance
Specialist Motor Traders Portable Hand Tool Insurance
One of our recent news articles was about underinsurance in general, however we decided to take this a little further as there appears to be a huge issue about Motor Traders Portable Hand Tools Insurance.
As motor trade insurance specialists, you would expect we know a few things about the types of machinery and tools used in a workshop whether that be a Service and Repair garage or a Bodyshop.
We’re not going into great depths generally about underinsurance here as this is a huge subject, below is short description, however, you can get a much wider idea about the issues – CLICK HERE
What is a portable hand tool?
Motor Traders Portable Hand Tools are sockets, spanners, air tools, electric tools, diagnostic equipment but also the toolbox’s themselves for which the tools are kept, something that can confuse, clearly, it’s not a tool!
The problem is that its not widely understood exactly what a portable tool is when it comes to things to be insured. The fact that it is portable though doesn’t necessarily mean that it should be included under the portable hand tools insurance policy. Confused, you’re not on your own.
Insuring the toolbox, for many mechanics having that cool toolbox is a must, brightly coloured with the manufacturer’s logo all over it, you know the one’s, almost a designer label, I guess in motor trade terms it probably is. These come in many sizes and need to be insured along with the tools and diagnostic equipment.
What’s in your toolbox? Forget manufacturers marques for a minute, let’s get to the nitty gritty of what’s in the box. We will be looking at values as well shortly so make a mental note of what’s in there. There are some very easy ways to obtain values without too much effort depending on the makes of your tools.
So, sockets, spanners, special tools, anything that is handheld, simple things like hammers, chisels, pullers, and all the little things you forgot you had, this should also include the special diagnostic tools such as plug ins and similar with their associated software, in fact anything that is used for diagnostic analysis for use on a vehicle.
Air tools, these will include DA’s, Drills, Cutters and Spray Guns, anything that is air fed.
When is a portable Hand Tool NOT a Portable Hand Tool?
Its very easy to misunderstand what goes in what section on an insurance schedule, we know this because not only is the customer confused, the matter has been made worse by the advice they have been given.
The key two parts are portable hand tools and machinery and plant. Unfortunately, this is where confusion can sometimes arise, a toolbox isn’t a hand tool but it does come under a hand tool definition, a small TIG welder, yes you can carry this around but you wouldn’t necessarily put this within hand tools despite it being portable.
Motor Manufacturers special tools
Not every motor trader has these unless you are specialising in a particular motor manufacturer. The problem is that whilst they do have a value, what is that value, for some of the tools it may be years since they last saw the light of day, so what do you do with them, how do you value them?
Many are now obsolete, so how do you put a value on these. Unfortunately, there isn’t an easy answer to that, is a replacement obtainable, if so, what is its cost to replace, you can’t replace it as new, so you have few choices.
For these there is no easy answer other than to discuss with us what you have, there are options which are too complex to go into detail here. The point is though, be aware you have them and ensure they are insured in some way, reinstatement cover (new for old), indemnity cover (new cost less wear and tear) or specifically exclude them from the list of portable hand tools if you place no value on them or wouldn’t replace them if a loss occurred.
There is a reason to specifically exclude them if you have them but choose not to cover them, in the event of a loss an insurer could take them into account and render you under insured.
How much should portable hand tools be insured for?
Portable Hand Tools should be insured for the value to replace or reinstate them as new without betterment. It should be the manufacturers or suppliers retail price without discounts or special offers.
However, the simple answer, how long is a piece of string? Before we look at this piece of string, let’s just remind ourselves how the hand tools need to be insured.
Underinsurance is a huge issue, and the contents of your toolbox is no exception. The amount that you insure for MUST represent the cost to completely replace the tools you have as NEW.
The misconception still exists that if you insure your tools for let’s say £3,000 (example) that in the event of a loss the insurer will just give you a cheque for £3,000, this isn’t the case.
So here is a (very) very simple example: If the correct replacement value to replace the tool box and all its contents is £6,000 and it was stolen and you had only insured for £3,000 this means that you would be half underinsured, the insurer would only pay 50% of the amount of loss, £1500 in this case less any excess. It’s called the Average Clause, look it up in your policy. Almost all insurance policies have this clause.
Think about this if your tools are in the tens of thousands!
If you haven’t already seen our article on underinsurance, this is the very reason why you need to know what’s in your toolbox, what is a portable hand tool and what is its replacement value.
The toolbox, how much is it to replace all the toolboxes in your premises? These come in all shapes and sizes, from the budget to the hugely attractive massive boxes that are almost workshops in their own right.
What is the cost to replace it? This should be the cost as if you bought new without any discounts, no special offers, no part exchanges, no mates rates but the actual “as new” cost.
The contents of the toolboxes, this is where the fun starts, this can be a very simple process but also very difficult if you have every brand name under the sun.
The difficult method unfortunately is to go through each draw and add up the replacement cost of the items, many you will have had for years so when you obtained it for just a few pounds, it could now be twenty pounds, it’s up to you to establish the replacement cost, again as new, without special discounts not what you can get if for as a special deal on an auction site but the full retail cost of the piece.
The easy way… for many who purchase their tools on a monthly basis from the mobile tools’ shops you’re in a great position. Mr Mobile Tools Shop man, big van, franchised operation, from the USA (I can’t use their real names for fear of some breach of something that someone will dream up) but let’s call them “Break Off” (get what I did there) might not love you for asking, but what you need to do is ask how much you have spent with them over the years. Tell them that its for insurance purposes and they will probably advise you a percentage to add on the top, 25% to 35% is not unusual.
Talk to a member of our specialist insurance broking team today
Why do you need to increase the value?
Don’t forget that the tools you have purchased from Mr Break Off’s Mobile Shop has happened over what might be many years, so that 10mm socket you bought in 1996 for £2.00 might now be £20.00, so I have possibly exaggerated a little but you should get the point. Again, just a reminder that you need to insure for the “replacement” as new cost, NOT what you paid for it.
Mr Break Off’s man might be able to give you a very accurate replacement figure, press them, you are the customer.
Motor Trade “Employees” Portable Hand Tools Insurance
Your employees will no doubt have their own tools, so who insures them, the employee, you, nobody, somebody, or possibly not entirely sure.
So, employees portable hand tools, most garages employ mechanics and most have their own toolboxes.
Explained above is how to arrive at the values of the portable hand tools used in the business, unsurprisingly this also applies to your employees. In many cases the mechanics portable hand tools have a much higher replacement value than those of the business so its important that your mechanics also understand the importance of obtaining the true reinstatement value of their toolbox as well as the contents of it.
An important point to remember, motor trade business insurance is covering the assets of the business and therefore its always a good idea to make sure that the value of the employees hand tools is shown as a separate amount, in fact some insurers may specify them separately to hand tools owned by the business.
Portable Hand Tool Security
Its will beyond the scope of this short piece to go into all the different types of security available for businesses, however there is usually one particular area that is quite common across all motor trader’s insurance policies and that is how the tools boxes are secured.
Insures like you to protect your investment and whilst they are providing you with insurance cover, should something happen to them, they just want to make sure that you are minimising the potential for a claim, particularly a theft claim.
If a fire occurs at your garage premises then the tools are covered and are replaced accordingly (subject to the sum insured being correct remember), theft though remains a large threat given the value and somewhat usefulness of your portable tools.
Particularly tools from Mr Mobile Tools Shop man, every budding mechanic loves to have these types of tools in their toolbox, it’s almost like showing off that rather nice expensive watch, so don’t forget, there is a ready market for your tools.
As most tools live in toolboxes, these can be moved around, the whole reason you probably bought that roll cab in the first place. So here lies the issue, for insurers anyway, that roll cab (clue is in the name) can easily be rolled out straight into a waiting vehicle, despite it weighing about half a ton. Theft is an issue!
To stop this happening an insurer may ask (demand actually) in the form of a condition or warranty which requires you to fasten the toolbox (boxes) to the fabric of the building. Not all policies do but you really need to check.
Sometimes insures may specify exactly the type of security they require; this can be a specific type of padlock and chain or they might just say that the toolbox should be securely fastened to the fabric of the building.
We can’t provide any particular advice here because it really is down to your insurer, motor cycle chains are ideal as are lengths of steel wire through the handles fastened to the wall, even bolting the roll cab to the wall is an option, for the purists amongst us though drilling holes in a £7,000 tool box might hurt a little.
So, there we have it the correct way to insure your business and employees portable hand tools.
Speak to a member of our team regarding your Portable Hand Tools Insurance
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Speak to us about insuring your Garage and Motor business, we are Motor Trade Experts, what we are not though is a call centre, you will receive knowledgeable advice from team members who deal with motor traders every day throughout the UK.
Motor Traders Portable Hand Tools Insurance is just part of a Motor Trade Combined policy, all covers dovetail to provide insurance covering all types of eventualities.