Business equipment insurance: What is it and what does it cover?

posted byLes Roberts on August 25th 2021 | Business Insurance

Imagine getting into work, eager to embrace the day ahead only to discover that some vital business equipment has been damaged or stolen - your laptop has booted the bucket, your toolbox has been stolen, or some specialist equipment has been broken beyond repair.

It’s a frustrating situation to be in, and if you need those unavailable items to carry out your work it can be a genuine disaster for your business. That’s why it helps to have the right business insurance policy in place. 

Thankfully, there’s a business insurance policy to solve most of your problems. If you employ even one member of staff, you’ll need to take out employer’s liability insurance. If you keep stock in a storeroom or shop front, stock insurance is a good idea. 

And if you rely on equipment of any kind, it’s worth considering a business equipment insurance policy.

What is business equipment insurance? 

Business equipment insurance is a type of insurance that covers you against theft or damage to any tools you use to carry out your daily trade. 

Having cover in place means you’ll be able to claim for any lost, damaged, or stolen equipment. Your insurer will cover the cost of any repairs or replacements, subject to the terms and conditions of your policy. 

As with all types of business insurance, it offers a safety net in case the worst should ever happen.

It might seem a little daunting to discover yet another type of insurance on offer, but we can easily add this type of cover to your current business insurance policy. 

What types of businesses need business equipment insurance?

If your business relies on any specialist tools to function, then it’s worth adding equipment insurance to your cover. 

Trades that instantly spring to mind are plumbers, contractors, electricians, engineers and carpenters, but if you work in the creative sector (photographers, journalists, artists, and small shops) you should consider getting cover too.

Think of it like this - if you physically cannot work without a specific piece of your equipment, then it could be worth insuring it. There are different levels of cover available, and the price you pay will depend upon how extensively you need to protect your tools and how much it would cost to replace or repair them. The industry you work in and the location of your business will also affect the cost of cover.

If you think your business might benefit from taking out business equipment insurance, a member of our insurance team will talk you through your options to find the right cover for your unique needs.

What tools and equipment does business equipment insurance cover?

As stated earlier, business equipment insurance covers most items that are critical to the running of your business, for example:

  • Specialised saws
  • Cutting equipment
  • Drills
  • Specific screws and hammers
  • Wrenches
  • Wire strippers
  • Specialised screwdrivers
  • Photography equipment
  • Cherrypickers
  • Design equipment 

Having cover in place means your insurer will cover the cost of repairs or replacement for any successful claims. So long as you follow the correct process when making your claim, then this should minimise any disruption to your work and mean you’re not left out of pocket. 

But if something happens to your equipment and you’re not protected, then you’ll need to fork out the money to replace the item yourself, which could cause all sorts of issues and even mean you have to stop trading temporarily.

Do you need insurance to cover your own equipment and plant tools?

Different business equipment insurance packages offer different levels of cover. The level of cover you need all depends upon the circumstances of your business.

Basic business equipment insurance covers the main tools you need to work on a daily basis, but you can opt for more in-depth plans which protect your equipment on the road or out of the office too.

Say you’re a carpenter and you drive a van as part of your work. If you choose a more comprehensive level of equipment cover, then you could choose for your tools to be insured even if they were stolen from your van rather than taken from the office or construction site. But be aware that this added risk means your cover will be more expensive.

Additionally, if you work from home, then let your insurer know, they might be able to amend any home contents insurance you already have out with them to include work related tools.

Do you need insurance for hired equipment and plant tools

When you hire tools and plant equipment, the hiring company will usually offer insurance to cover the equipment if it is damaged or stolen. 

Taking out cover for hire equipment isn’t a legal requirement, nor do you have to take the cover offered by the hire firm, but they might insist that some form of cover is in place as part of their terms and conditions. They won’t want to be left out of pocket if you damage their expensive machinery and can’t afford the repair bill.

If you’re using hire equipment and plant tools, you’ll need to consider taking out public liability insurance, in case you damage another person’s property or injure them when using the equipment, and personal accident insurance, in case you injure yourself. This type of cover might be included as part of any property maintenance insurance or tradesman insurance policy.

Do you need office equipment insurance?

Business equipment insurance doesn’t just cover tools and plant machinery: it’s also designed to protect against theft of or damage to portable machinery and office equipment.

It’s important to check your personal policy, but the list of defined perils usually covered is as follows:

  • Lightning
  • Fire
  • Explosion
  • Storm
  • Civil commotion
  • Flood
  • Malicious persons (other than thieves)
  • Earthquakes
  • Escape of water from any tank, apparatus or pipe
  • Subterranean fires
  • Riots
  • Impact by any road vehicle or animal

This cover is usually provided additionally to standard accidental loss, destruction or damage and theft.

Why do you need business equipment insurance? 

Having business equipment insurance just makes sure that your business is protected and can still operate if your tools get damaged, broken or stolen. No one wants to lose business while they save up to replace an expensive piece of kit - business equipment insurance can help make sure you don’t have to.

Standard business equipment insurance usually covers.

  • Tool theft
  • Equipment breakage
  • Misplaced or lost items
  • Vandalism
  • Damage to leased or rented equipment

If you don’t have business equipment cover as part of your existing business insurance package, the team at Bionic can get it added to make sure you have complete cover and peace of mind. 

What perils are commonly covered by business equipment insurance?

Business equipment insurance will usually reimburse your business for the cost of repairs or replacements in the following situations:

  • Loss - Your business has moved to a new location and vital tools are misplaced.
  • Theft - Your workshop or business premises is broken into overnight and essential business tools are stolen.
  • Damage - You or an employee drops an essential piece of equipment, and it is damaged beyond repair.
  • Natural disasters - floods, earthquakes – If a natural disaster damages vital tools or pieces of equipment.

Always make sure you read the conditions of your policy. There might be restrictions or rules that you must stick to in order to make a claim. 

For example, many policies state that you are required to inform your insurance company if the quantity or value of your tools changes at any time. So, if don’t give your insurer this information, your policy could be void and your business could lose out.

How much business equipment insurance cover do you need?

It depends on your business and the kinds of tools you use on a daily basis. It’s important to make sure your equipment is valued correctly otherwise it could affect how much compensation you get. If you over-value your equipment, you may be accused of insurance fraud.

Make sure you calculate the value of your equipment based on the cost of buying them new, regardless of whether used a discount or bought them second-hand — this is where many people get confused.

Are there any exclusions with business equipment insurance?

As with all insurance policies, there are a few situations not covered within business equipment insurance, they are:

  • General wear and tear
  • Pre-existing faults in equipment
  • Damage during maintenance of equipment
  • Unexplained loss or disappearance of equipment
  • Virus or hacker activity
  • Willful negligence
  • Terrorism
  • Loss by fraud or dishonesty of a member of the business (unless the loss is reported to the insurer within ten working days).

To get the right level of cover for your business, give the team at Bionic a call today.