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TM reader David writes: “Today I was switching homeowner’s insurance and wanted to ensure that my workshop and its tools–worth an estimated $175,000–were properly insured. While the insurance agent was completely sure that they were covered, I asked for a copy of the actual policy. After reading it through, I discovered that instead of the promised $100 per tool, it was actually $1,000 for ALL THE TOOLS should they be stolen. I wonder how many other Toolmongers think they’re covered only to find out when they run into an event that they don’t have the coverage they expect?”

That’s a great point, and totally made me dive for my own policy to take a look. Here’s the skinny: Most policies set limits on some specifically valuable material, like jewelry, furs, silverware, and so on. This isn’t necessarily designed to screw you if you have items worth more than the limit, but rather to allow the insurance company to set the price for your policy. They’ll increase those limits, but the cost of your coverage will increase as well. I’m guessing that, for example, if you have a home worth $400,000 and wish to add $175,000 in specific coverage for the stuff in your garage shop, you’re going to pay a pretty significant premium.

My first experience with this was with computer equipment. Thankfully, unlike David’s agent, who sounds a bit shady, mine was up-front with all of this. Knowing that I have goings-on in my life involving technical gear (like Toolmonger), he asked specifically about my equipment. I have far more than the standard $2,000 limit, so we bumped it to $10,000, which ended up costing me very little.¬†Going back and looking, though, I don’t have an extension for tools–of which I own quite a few. I’m going to schedule time this next week to give my agent a call to discuss upping my coverage.

How about you? Do you have extensions in place on your homeowner’s insurance to cover your tools?


14 Responses to Are Your Tools Insured?

  1. Doctor John says:

    Wow. Thought about insuring my wife’s jewelry, NEVER thought of my tools. Thanks for the post!

  2. Mac says:

    Absolutely. With pics of everything of decent value. Doesn’t cost that much more, but I don’t have $175K worth of tools.

    Be sure to get replacement cost coverage (as opposed to cash value). Costs more, but worth it.

    And David ought to seriously consider switching agents – his should have definitely known about the coverage.

  3. Ben Granucci says:

    I’ll second the comment about replacement value coverage. About a year ago, my parents (brand new) washing machine overflowed in the second floor laundry room. And then it ran all night as they put in the load of laundry just before they went to bed. The damage was massive. Replacement value coverage meant that the entire tile floors in the laundry room and kitchen below were replaced (instead of just replacing the loose tiles). It meant that the entire kitchen got repainted and an entirely new ceiling, instead of just the water-damaged areas. I could go on and on.

    On a related question, how do you insure your tools at work? My “home” collection is still relatively small, however my “work” toolbox and its contents are probably in the low 5-figures range.

    • Dave D says:

      I have a rider on my general liability policy that covers loss/theft of tools. The carrier doesn’t require that individual items be listed on a schedule, but I do maintain a schedule listing tool I buy for work that costs over $50, including acquisition date & costs, serial numbers, etc. I hope that will help if I every have to file a claim.

  4. Ross says:

    Definitely have a conversation with your agent if you use the tools in the course of your employment too. Many policies have an exclusion or low limit of coverage that would apply to your tools even if you are just working for wages. I suspect that adding a rider for their tools wouldn’t occur to most folks that don’t have their own business.

  5. Adam R says:

    Inland Marine policies are your friend. Covers any named item, anywhere in the world.

    Talk to your agent, and if he/she doesn’t want to offer it too you, find a new agent. Every major insurance company offers this coverage and it isn’t that much, especially when you are talking $10k and up for tools.

  6. rob says:

    eff thats a dam good idea

  7. Rick A. says:

    This is a great article. We insured our tools a few years ago after an unfortunate mishap in our warehouse.

  8. Jay says:

    The solution is obvious.

    Have your wife dress up in her nicest dress, then take a lot of photos of her wearing a gold chain necklace with a different tool pendant hanging from it.

    IF/When your tools get stolen, you now have photographic proof that they were Jewlery and should be covered by insurance.

  9. Rick says:

    (quietly goes looking for his homeowners policy)

  10. Craig says:

    When buying/renewing/updating your homeowner’s policy, MAKE your agent explain everything. Actual cash value versus replacement cost, business property, property of others, perils insured against, etc. You will be glad you did this if/when you may encounter a loss.

  11. Toolfreak says:

    Personally I find insurance to be the biggest scam on the planet. You give people money up front, so they *might* give you MORE money sometime later, IF something BAD happens. And this keeps going. You keep giving them money, as long as nothing bad happens. You never get any money back if you never file a claim or use the policy, they just keep it. All of it.

    Maybe it wouldn’t be so bad if insurace companies were honest and honored claims. But it’s a scam on a criminal level when the company you pay for coverage actually won’t even honor your claim or pay ANYTHING when something bad does happen.

    I have found it much less expensive and more reliable to spend money on preventative protection such as firearms, locks, etc. rather than the false promises of insurance.

    Of course if you’re either well off, or making payments on the house/car/tools/electronics, insurance might be a good idea compared to making payments on something that’s been lost, stolen, or destroyed. And it goes without saying that anything involved with your business should be insured.

    On a related note, if you have a policy with Allstate, cancel it. They deny almost any and all claims, and you can count on losing just about everything, including what other money you may have left after a loss, in legal costs. The other big companies aren’t a whole lot better, either.

  12. Ed Angell says:

    I was disappointed to read many of the oomplaints about
    insurance for tools. I am a retired insurance agent with 42 years of experience. I also have a a lot of tools. You don’t need anything special on your home insurance ‘unless
    they are used in a profession’! Home insurance is designed for the everyday ‘Joe’ who is not a commercial carpenter
    or other individual in the trades who uses his tools to make a living. If you are running a business you need to
    carry business insurance. You can’t expect a home policy to cover business equipment. That is insane to think it would! Read your policy!

  13. Gough says:

    After looking into insuring our company’s tools, we chose not to do so. The cost for doing so seemed out of line. On the other hand, I often play the mental game where I think, if we lost all of the company tools, what would we do? I think of it as a variation of the 80/20 rule: 20% of our gear (maybe even less) probably accounts for at least 80% of our business. If we lost it all, those tools are what I would be buying the next day. The rest of it we would pick up as the jobs require, paying as we go.

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