Do you have the right tradies insurance for your business?
When it comes to finding insurance for your tradie business, not all insurance policies are an apple for apple comparison. Here are some tips to guide you if you’re looking to purchase a policy or renew one.
It’s all in the prep work
Many tradies would agree that good preparation is essential for doing a job well done. The same philosophy applies to business insurance.
Before comparing insurance packages and quotes, it’s important to gain a strong understanding of your business risks, which can range from events that cause major disruption to your business to those that pose a minor inconvenience to your on business operations or finances.
Tip: Jot down a list of all the day-to-day risks that may arise for your trade business, making sure to also include those that could occur on less frequent services. Remember, while many building risks might involve damage or injury, they can also be in relation to client product advice offered as part of your service.
As well as reviewing your business risks, it’s equally important to know the insurance requirements set by the state or territory in which your business operates. In Victoria for example, plumbers must have compliant public liability insurance to receive or renew their licence. While liability insurance may not be compulsory in other states, if you were to cause accidental damage to a person or their property as a self-employed plumber, for example, you could be liable to pay a substantial amount in compensation.
Did you know? Not all public liability insurance policies cover tradies for work completed on buildings over two storeys high. Be sure to include this in your risk assessment if you or a licensed trades employee in your business performs this type of work. If you’re not sure what exclusions or regulations apply to your type of work, make sure you seek advice.
Comparing insurance policies
Once you’ve completed your risk assessment, it’s time to find your insurance.
When asking for quotes, it’s important to understand some key terminology:
- Limit of liability – You can’t claim more than this limit. It’s the maximum amount of money that you can receive under the insurance policy for a successful claim.
- Excess – The sum of money you pay when making a claim on your insurance policy.
- Inclusions – This is what is included in your insurance policy. Check that it covers all your business risks, for example, you might need cover for providing incorrect product advice or liability cover for work on construction sites over two storeys.
- Exclusions – These are situations or events that are not covered under your insurance policy. Insurers can offer different cover terms in their policies. Be cautious of policies that are cheaper than others – check first to see what events are not covered.
Tip: Be aware that insurers can often assess domestic and commercial work differently so ensure you correctly declare your activities.
Did you know? You can find all the information you need in the insurance policy Product Disclosure Statement (PDS). Every policy will have a PDS that you can refer to as the insurance policies single source of truth. This is where you might seek advice from a broker if it’s difficult to understand.
Be careful not to compare insurance solely on premium
Carefully consider price factors when comparing different policies. The last thing you want is to a policy that doesn’t protect you, your tools, your clients and your team on the job.
Insurers generally base a policy’s premium on the level of risk and having a high number of exclusions can reduce these risks, which should result in a lower premium. However, it could also mean you don’t get the cover you may need – but not always, it depends on the nature of your business.
In addition, be careful to ensure your policy complies with the local regulations and mandatory requirements – as per the earlier example of the Victorian Building Authority. All this should be taken into consideration when comparing insurance quotes.
If in doubt, ask
Choosing a liability insurance policy for your trades business is an important decision and can sometimes mean the difference between being covered for a specific risk or not. If you have questions that can’t be found online, talk to a specialist trades insurance broker or risk advisor who can explain your package options and help you find the right insurance, at the right price point for your business.
