Insurance and Tools

[rallenc]

One of our newer members Sandog 79 wrote in an earlier post that he was looking to replace tools lost due to a burglary at his home. This brought up a question that has been in the back of my mind for awhile.

Many of us have thousands and by the looks of some of the collections, tens of thousands of dollars in tools in our homes. Some of these are "working" tools; some are more like collections as I doubt we'd be able to justify 100ratchets as personal use to any insurance company. Also, as many are bought at flea markets or on ebay a valid receipt may not exist, and the cost to replace is many times the initial expenditure in these cases.

I was hoping that a few of you members would share your approach to insuring your tools. Do you have a seperate rider to your homeowners? How do you document your tool inventory? Lists? Photos? Video?

And for those unfortunate souls, if you did in fact have a loss how did you deal with the insurance company? and are there any lessons that we could learn from your experience? Sandog 79, please chime in on this one.

Thanks to all.

 

[da34guy]

Had an 80K +tool loss 6 months ago, due to burglary
Could only get 36K outta ins. co
Had complete inventory list and documentation.
Didn't have an umbrella policy for tools.
Make sure ya do.
BTW ---- Changed insurance company the day after rec'd the check!!!!!!!!!!!!!!

 

[Mike83]

I have a $7000 limit for theft of tools, unlimited for fire loss on my HO ins policy. Anything additional needs a rider. Ins will pay the *replacement* cost of the tools - whatever the today price is, not the purchase price.

I take photos of my tools because I would forget what I had otherwise.

 

[rallenc]

Mike 83, is that $7K standard for your policy or did you select a higher limit?

 

[da34guy]

7k wouldn't even buy my 2 rollaways, empty.

 

[boiler7904]

I have a $7000 limit for theft of tools, unlimited for fire loss on my HO ins policy. Anything additional needs a rider. Ins will pay the *replacement* cost of the tools - whatever the today price is, not the purchase price.

I take photos of my tools because I would forget what I had otherwise.

Make an Excel or Word based list that includes a brief description, make, model, serial number, date codes, accessories, etc. along with price and email it to yourself (assuming a web-based email account like yahoo, gmail, msn, etc.). In the event of a claim, the list is easy to get to anywhere you have computer access. Easy to send to your agent or print.

I also keep track of retail list price and the price I actually pay for things. Over time, the savings can surprise you - for tools and accessories bought new, I'm anywhere from 10-90% ahead on individual items and average around 15 or 20% for everything combined.

Most important thing is to keep the list updated regularly - monthly or quarterly depending on your buying habits. That reminds me to go out to the garage and spend a few hours reviewing my list and recent purchases soon.

 

[r6_cannibal]

Make an Excel or Word based list that includes a brief description, make, model, serial number, date codes, accessories, etc. along with price and email it to yourself (assuming a web-based email account like yahoo, gmail, msn, etc.). In the event of a claim, the list is easy to get to anywhere you have computer access. Easy to send to your agent or print.

That's a great recommendation. Pictures to go along with it would be great as well. I would assume receipts would help a good amount too. Scanning receipts for every tool you buy might get tedious, so if you decide to keep originals filed away, make sure they're in a safe spot so the wife doesn't find out exactly how much you spend on your tool habit.

 

[vette-kid]

That's a great recommendation. Pictures to go along with it would be great as well. I would assume receipts would help a good amount too. Scanning receipts for every tool you buy might get tedious, so if you decide to keep originals filed away, make sure they're in a safe spot so the wife doesn't find out exactly how much you spend on your tool habit.

the email idea is a good one. Along with that...keep photos on a photobucket account (or similiar) for the same reasons. You could scan the reciepts and upload the image to photobucket as well.

 

[Mike83]

Mike 83, is that $7K standard for your policy or did you select a higher limit?

$7k is the standard limit.

The excel file is a good idea - I just need to put it in action! I use spreadsheets for everything else (must be an engineer thing). That would also allow me to see what coverage I need. The replacement cost I'm sure is much higher than my purchase cost.

 

[JD6619A]

homeowners insurance didn't cover anything over the normal tools a household would have in my case If i remember they were only covering $1500.00 in replacement cost. I got a seperate insurance policy to cover my tools at work and at home

 

[Diesel_Crawler]

homeowners insurance didn't cover anything over the normal tools a household would have in my case If i remember they were only covering $1500.00 in replacement cost. I got a seperate insurance policy to cover my tools at work and at home

Who did you get it through? I can not find a soul who will insure my tools at work...

 

[Skyline]

Had an 80K +tool loss 6 months ago, due to burglary
Could only get 36K outta ins. co
Had complete inventory list and documentation.
Didn't have an umbrella policy for tools.
Make sure ya do.
BTW ---- Changed insurance company the day after rec'd the check!!!!!!!!!!!!!!

I don't think an "Umbrella Policy" is the correct term. AFAIK, the term Umbrella Policy refers to a liability contract that wraps around homeowner's and auto policy liability limits. There are business versions as well. Basically, you want your tools covered on a replacement cost basis, not "Actual Cash Value" (ACV = replacement cost less depreciation). And you need to make sure the value does not exceed your total coverage, or any other inside limitations of your policy. How you do this can vary greatly depending on where the tools are and who they belong to. Perhaps adding them as a "scheduled item" is what is needed, and that will generally insure the items on a "stated" or "agreed" value basis.

As a homeowner:

If the tools are in your house or attached garage, there is generally no inside limit for tools used for personal use. It will not cover tools used for a business, (or very little, anyway). But there are two basic types of homeowner's policies, basic and enhanced. A basic homowner's is likely to pay ACV. Right there it is easy to see how an $80k loss can become $36k in a heartbeat. Enhanced policies come in many varieties, and may have more expansive coverage in many areas, but also generally include "Replacement Cost" coverage. Often, "Replacement Cost on Contents" can be added to a basic policy. One potential issue is if your tools are in a detached garage; many policies have limits for a detached structure. Usually this is not an issue for a burglary, but it can be a real problem if a fire destoys everything. Where it can be a problem is if you have $100,000 of S-O tools in the detached garage of a $150,000 house. While your priorites might be just right for this board, you might find your coverage limited to 10% to 25% of the overall amount on your house for the detached structure. The same tools in a $1M home with the same insurance policy might be no issue.

As a business owner:

If your tools are kept in someone else's shop, or used for a business, that could be a real problem to insure with a homeowner's policy. In either case you probably need a business policy, and chances are, the tools will need to be "scheduled". (Scheduled means adding an item to a seperate policy rider...like you would for you wife's engagement ring.) If you own a shop, there are package programs that cover a host of needs for a garage owner. But usually, these policies have a dozen or more different inside limitations for various areas of coverage. Each area of coverage can be adjusted to fit the needs of the shop owner. Coverage for ACV or Replacement Cost on contents will certainly be an option. One gray area might be tools belonging to one of your employees. Usually there is very limited coverage for property of others, (except for the cars you are fixing...those will usually be fully covered while in your care)...so again that might need to be scheduled. If you don't want to pay for coverage for your employees' tools, you might discuss this with them, and either make them sign something agreeing that you are not responsible, or make them show you a current BOP (Business Owner's Policy) insuring them. One other area of concern to discuss with your agent is where "employee dishonesty" comes in. I have a friend who just had a former employee bring a flatbed to his shop on a Sunday, and he stole a near new Snap-on Classic 78 filled with tools...all of which belonged to the shop owner. He used a key to get in...no "breaking and entering". While the creep has been ID'd in the theft, best guess is that he is now in Mexico. There is no trace of the tools.

Bottom line here.....you need a really good agent. Chances are, your local State Farm or Allstate guy is NOT going to have the resources if you have a business. I would recommend that you look for a brokerage that handles many major carriers. Look for a shop with at least a dozen or more employees. Small shops generally can not deal with more than a few insurance companies, but large brokerages can deal with more insurance companies. If you need help, I have VERY good contacts that I work with in this area of expertise, but that is only for NY, NJ and CT.

 

[JD6619A]

Who did you get it through? I can not find a soul who will insure my tools at work...

I inquired thru my bank and they referred me to a sister company of the bank who does this type of insurance.

 

[r6_cannibal]

Lots of great information there skyline

I bookmarked this thread for when I get renters insurance for the place I just moved into.

 

[Skyline]

For those who say that they have a limit on tools in their Homeowner's policy...is that a Renter's policy????

I just pulled out my homeowner's policy, which is a standard HO3 policy form, (used by most insurance companies), and there is NO LIMIT on tools. I do have a serparate endorsement for Replacement Cost on Contents.

What I did find, is that there was a $2,500 limit for property on the "residence premises" used at any time or in any manner for any "buisiness" purpose. That same limit drops to $250 for property used in business once it is off the residence premises.

One thing I forgot to mention....READ YOUR POLICY. There are laws pertaining to the readability of insurance policies, so don't let your eyes glaze over. A standard homeowner's policy is not that tough to read and understand. If something is not clear, ask your agent.

 

[Kevin54]

I don't think an "Umbrella Policy" is the correct term. AFAIK, the term Umbrella Policy refers to a liability contract that wraps around homeowner's and auto policy liability limits

I think it is called a "Rider" and not "Umbrella".

That's a great recommendation. Pictures to go along with it would be great as well. I would assume receipts would help a good amount too. Scanning receipts for every tool you buy might get tedious, so if you decide to keep originals filed away, make sure they're in a safe spot so the wife doesn't find out exactly how much you spend on your tool habit.

It's a good idea to scan receipts of anything that amounts to anything. tools, car parts that have limited warranties as the receipts today have disappearing ink on them. You leave them set for awhile and they get to the point that you can't read them. If you scan them you have a copy that does not disappear.

As far as insurance, it is a good idea to get in touch with your agent every six months or at least once a year. If you buy a new garden tractor, new appliances, etc, etc, make sure your insurance is updated. When I bought my Compact tractor, I notified the insurance company about how to go about insuring it as it is kept in a seperate garage from the house. It does fall under homeowners if there would be a fire of some other damage. But when I called about it, I also e-mailed the agent various pictures of the tractor, serial numbers, engine pics. All of this goes on file. In case of it being stolen, there is documented proof of numbers needed. It is the same with tools and collectibles. I upped the insurance on my tools and boxes, the wife had to up the insurance on her collectibles. You can get quite a few thousand wrapped up in everything and not realize it. So for a few bucks a month, you're covered.

 

[72chevy]

This inventory software was mentioned in the past. Looks complete.
http://old.iii.org/static/knowyourstuff/allstate/

 

[Joe Mamma]

I didn't get a chance to read this entire thread. But I recently had my tools stolen from my home, and had to make an insurance claim. Skyline's info seems to be right on.

I got my policy about a month before my tools got stolen. I specifically asked my agent about the tools, and was assured it was not a problem because I don’t run an auto repair business out of my home. But the claim process was still difficult. In the end, I ended up getting decent money back.

The insurance company was very difficult to work with. It seemed like I was doing all the work, including the insurance company’s job. They had me figuring out prices, depreciation and other calculations, and they would just double check me.

My agent got angry at them, probably because they were making her look bad. She got involved, and the situation was taken care of VERY quickly. I’m sure I got more money back because of her too. In my case, it really helped to have a good relationship with your agent.

One of the things that really helped me was to have pictures of everything. Not just pictures from 15 ft away, I mean close up pictures so you can see the model numbers/sizes on some of the tools so you can take inventory later if necessary. It's amazing what you will forget you have once they are gone.

Making a list is best. But for a lot of people, it's just not realistic for them to do. That's why I suggest close up pictures. Again, you can take inventory later if you have to.

I just want to clarify one thing. The way my insurance company worked for my tools, they would give you the higher of (1) replacement value or (2) Actual Cash Value (ACV).

So let's say you paid $300 for a Snap-On wrench set 20 years ago, and it got stolen. If you buy another set for $400 (and submit the receipt), they will actually pay you the $400. If you "just want the money" and don't buy the same set, they will pay you a lot less (let's say $50) because it has depreciated. The insurance company had categories of depreciation for different things. I think tools are depreciated over 25 years, and electrical devices are depreciated over 7 years or 10 years.

If I remember correctly, I was given a chart to fill out, and they also wanted to know how old the tools were (for depreciation calculations). So you should also keep track of when you bought them.

Because electrical equipment depreciates must faster than hand tools, if you have something that could be in both categories, like digital calipers or scan tools, categorize them as tools, not electrical devices.

Even though I got insurance money and bought a lot of the same tools, they are not the same. A lot of the stuff that was stolen was irreplaceable. You should try very hard to protect yours.

Joe Mamma

 

[nate379]

I have all my tools/equipment insured. $50,000.

 

[Skyline]

So let's say you paid $300 for a Snap-On wrench set 20 years ago, and it got stolen. If you buy another set for $400 (and submit the receipt), they will actually pay you the $400. If you "just want the money" and don't buy the same set, they will pay you a lot less (let's say $50) because it has depreciated. The insurance company had categories of depreciation for different things. I think tools are depreciated over 25 years, and electrical devices are depreciated over 7 years or 10 years.

Assuming that were the case...then the only way to play it if you have older Snap-on tools....the intelligent move would be to replace 100%, whether you still needed it or not. Then you could sell the new, unopened Snap-on stuff for close to 50% of list on eBay. So you would never have to suffer 88% depreciation like you suggested.

Also, I think if you took your set of photos to a Snap-on dealer, and had him produce an invoice, (whether or not the items were actually bought), you could use that to file a claim for replacement value.

I agree that dealing with insurance companies can be a hassle, but getting your agent involved was a smart move. That's what they are paid for. They get commissions every time you pay a premium, and are essentially "on call" for your assistance when and if it's ever needed. Obviously most of their clients will rarely need help...but a major claim is something you want to work closely with your agent on.

 

[danc333]

For what its worth. Hagerty classic car insurance . http://www.hagerty.com/ says they cover tools on their website. It may be something worth looking into.

 

[Skyline]

Hey danc333;

How about posting some better pictures of the rig in your avatar?

 

[sandog_79]

An umbrella policy is nice, but not necessary for just tools. An umbrella policy you can add 1 mil liability and it won't be that expensive and covers you in your house or auto. They are great policies to have, especially if you have multiple things to cover and the more to cover the cheaper they are. I had about 15k worth of craftsman tools stolen, most were 15~20yrs old. All mechanic hand tools, I also lost other things as well. For my insurance, I did a very smart move and everyone on this forum site should call their agent and verify this. GET REPLACEMENT COVERAGE. Had I had the other, I would hardly have gotten anything. Getting this coverage should be no more than 40/yr your stuff. Also, check the limits!!!! I lost out about 15k in jewelry and furs as I did not have seperate riders on my policy for this. My limit is 2500 and that is what they paid me. I know computers have a limit as well. I do not know about tools. For documentation, you just need to have photos and/or serial numbers. for most of your items. I believe some insurance agents will even send an adjuster out to do an appraisal of your tools. Now with replacement coverage, they will hold back a certain value of money called 'depreciated assest valuation'. in my case it was about 5k. Which means they gave me 10k for my tools and as I replace them above 10k, they will give me checks until I hit 15k and then that is all they will do. The insurance company will want you to provide receipts on the purchases, but you do not have to. As you are aware, craigslist and ebay are great. Send you agent pictures, model numbers and serial numbers and have their valuation team, do the numbers and use those numbers as your replacement price you paid. PM me if you have any questions. Also, looking for good deals on cman stuff for my replacements. I live in LA area.

 

[Major Ramifications]

When we bought our first house, the agent told me that there was a limit on each category, jewelry, tools, guns, etc. I remember the limit being ridiculously low in the guns category for what I had at the time, and now I know I would be way underinsured in the tools category as well. I have additional insurance on my guns through the NRA, but I am just taking my chances on the tools. Oh well, many people think I am crazy for not carrying flood insurance. I tell 'em that if it's gonna flood, it will flood whether you have insurance or not.

 

[vette-kid]

When we bought our first house, the agent told me that there was a limit on each category, jewelry, tools, guns, etc. I remember the limit being ridiculously low in the guns category for what I had at the time, and now I know I would be way underinsured in the tools category as well. I have additional insurance on my guns through the NRA, but I am just taking my chances on the tools. Oh well, many people think I am crazy for not carrying flood insurance. I tell 'em that if it's gonna flood, it will flood whether you have insurance or not.

Um, I think your missing the point here. Yes, its gonna flood one way or the other, the question is how much you have to pay out of pocket for the repairs and replacement. If you live in an area anywhere close to a major body of water, my personal opinion is your crazy not to get flood ins. Its so cheap, why not!

As far as tools, my ins told me that they would cover ANYTHING in the house or attached garage up to X amount. They didnt care if %90 of that was tools, so long as it was X amount or less. But all this has me thinking of doing an inventory of everything an confirming the coverage with my carrier.

 

[chrislehr]

This thread is making me want to call and check

 

[danc333]

Hey danc333;

How about posting some better pictures of the rig in your avatar?

I will as soon as I get a chance (might be awhile tho) In the mean time here is a link to my fire co website. http://www.station71.org/

 

[Flash21]

As far as tools, my ins told me that they would cover ANYTHING in the house or attached garage up to X amount. They didnt care if %90 of that was tools, so long as it was X amount or less. But all this has me thinking of doing an inventory of everything an confirming the coverage with my carrier.

Yup, same story here...although, I'm guessing there was a disclaimer if the property was used to operate a business.

 

[Dust]

Every time I purchase a tool, I make two copies of the receipt. One copy has the original stapled to the back and gets put in a binder, the other copy goes in a binder at work. That way if anything comes up at work, I can go straight to the paperwork and show it as being my property.

(I got spooked by my partner telling me about how the IRS shut down a dealership he worked at and wouldn't let the techs get their stuff unless they had documentation.)

I also take photographs, but haven't done so in a while. My list is actually about six months outdated, so I need to update it.

 

[arkracing]

I have all my tools/equipment insured. $50,000.

With who? Business Type policy?, Inland marine? Tell us more please.

 

[rsanter]

insurnce policys today have a ton of restrictions. make sure you have a good agent to walk you though all the pitfalls and advise you correctly. most items have a policy limit unless you purchase an added rider policy as an added cost. it will often require an aprasial or a listing of all the items and/or a declaired value

bob

 

[nate379]

USAA.

I went through with them with $$ amounts of everything I owned. She was like on the tools, but I told her I could make a list of what it would cost to replace everything and it would be well near that price.

I mean figure torque wrenches at $200-300 a pop and I have 5 or 6, impact guns... $200-300 each. Welder... $1000. Torch... $750. My toolboxes are right around $15k if I bought them new. Compressor $500. It adds up really fast.

With who? Business Type policy?, Inland marine? Tell us more please.