By Paul Harvey, Operations Director at Kynekt, an equipment protection and theft deterrent platform built for the construction sector
For many people, their tools are their livelihood. Plumbers. Electricians, carpenters, gardeners, mechanics; without their tools, their jobs become impossible. And if things go wrong, it’s often not a case of simply buying more. Specialist tools come with a specialist price tag, so when they’re lost or stolen, the financial impact can be devastating. Especially as it usually also means lost income. That, of course, is why professional tradespeople take out insurance. But it’s not always as simple as you might think. In fact, a huge number of tool theft claims are reduced, delayed, or rejected altogether. So, why is this happening?
Lack of proof
One of the most common reasons insurance claims for stolen tools are rejected is because the claimants can’t provide proof of ownership. A recent study showed that around 83% of tradespeople have no proof of ownership available when theft occurs. And without receipts, invoices, serial numbers, or photographs, insurers can’t verify that the items being claimed for actually existed, belonged to the policyholder, and were covered under the policy. And when that happens, the claim is unlikely to progress.
It’s easy to see why this happens – few people buy their tools in one go. They acquire and accrue over years, adding things as and when they need them. Some are second-hand, others are gifts or inherited from previous employers. Paper receipts often never existed, and the packaging containing serial numbers is naturally thrown away. The tools may be used every day, but it’s impossible to prove their existence, unless you’ve made a particular effort to do so.
It seems like a lot of extra work at the time, but if you get into the habit of photographing new tools, recording their serial numbers, and storing digital copies of receipts, when you have them, it can furnish you with the evidence you need should you ever need to make an insurance claim.
Underinsurance
A surprisingly large number of businesses get caught out by being underinsured, and it seems such a silly mistake to make. But when you think about it, all businesses slowly grow and change over time. New tools are added incrementally. A new angle grinder for a specific job, a higher spec drill when the old one dies, and slowly the value of your tools increase. But it happens slowly, so your insurance policy doesn’t.
When this happens, and your declared value of tools is lower than their actual replacement cost, payouts can fall short of what you need to get back to work. Sometimes significantly so. Some policies also apply proportional settlement rules, meaning compensation may be reduced because the insured value doesn’t accurately reflect the total assets. And when you add in inflation, you can find yourself seriously out of pocket. Sometimes to the point where your business is no longer viable.
That’s why you should never just renew your insurance policy. You need to review it fully, update it with a complete tool inventory and replacement values. It may mean that your premium increases. But at least you’ll be covered should you ever need to make a claim.
Picture a plumber like Jack Price in Hartlepool
His van gets broken into overnight and he loses around £8,000 worth of kit. His policy, taken out four years ago and renewed without a second look, declares £4,000. He has a receipt for the flushing machine he bought last spring. The rest was accumulated over a decade, a few pieces inherited from his dad, a set bought second-hand from a friend who left the trade, the rest replaced piecemeal as things wore out.
The insurer can only settle on what he can evidence, and applies proportional settlement on top because the declared value was less than half the real one. Jack gets a few hundred pounds back and spends three weeks off the tools while he rebuilds his kit on a credit card. Photographs, serial numbers and a five-minute review at renewal would have changed the outcome entirely.
What insurance-grade documentation actually looks like
To be fully covered after a theft, you need comprehensive documentation. Insurance-grade records typically include clear photographs of each item, serial numbers, purchase receipts or invoices, dates of purchase, model information, and current replacement values. For higher-value equipment, proof of servicing or maintenance can also be useful. And update everything regularly, adding and removing tools as you buy them and retire them.
How you keep this information is down to you, but it’s generally recommended that you store everything digitally and separately from your work laptop, which could just as easily be stolen, lost, or damaged.
How technology can help
While technology doesn’t instantly spring to mind in relation to tool theft prevention, it can actually be useful beyond documentation. You can, of course, use a spreadsheet to shape your inventory, but digital asset management platforms go one step further, providing a comprehensive inventory with secure proof of ownership, GPS tracking that alerts you when your tools are moved and shows you where they’re going, and even one-touch systems that allow you to disable your tools when someone takes them. Making it harder for thieves to get away with it in an industry that has typically been considered an easy target.
Prevention is just as important
Insurance is essential to any professional tradesperson, but you have to put in the work upfront to ensure that it’s valid. That means providing relevant security, not leaving tools in your vehicle overnight, and putting in the admin to make sure that you have all the documentation you need, in case you ever do have to make a claim.
Tool theft claims have risen by 54% in the last few years. And that doesn’t include the one in four that go unreported. There’s a huge market for used tools, and thieves feed it, largely because they’re viewed as hard to track and easy to acquire. Which makes it all the more necessary for people who rely on them to properly protect themselves, and to keep their insurance in order.
