Incidents happen, but without insurance, tradies could be exposed to crippling hits to the back pocket.
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Incidents happen, but without insurance, tradies could be exposed to crippling hits to the back pocket.

Why tradies need the right insurance

As a trademan, it goes without saying you know your industry. But you might not have the same thorough understanding of your insurance needs. Not having an in depth knowledge of the insurance market, the exposures you face and the appropriate insurance policies that will mitigate against your exposure can have a significant affect on your business, your livelihood and that of your family.
Some examples of a loss a tradesman may face are;

  • theft of tools from a site or a vehicle

  • malicious damage

  • weather perils

  • public Liability exposures such as;

    - leaving an electrical cord somewhere resulting in a trip and fall exposure

    - put a foot through a ceiling

    - dig a ditch that someone falls in and injures themselves

    - accidently dig up the phone/ internet lines

Even the most cautious tradies can find themselves staring down the barrel of a compensation claim if something goes wrong on a job. This is when it pays to ensure you have the correct insurance in place to mitigate against the exposures and using a trusted broker, with knowledge about your business and the different exposures you face can be a great investment in your financial security, and it can save you money and time in the long run. Some of the consequences of not having the correct insurance program in place or setting the correct limits include;

  • Uninsured exposures, resulting in you being out of pocket for a loss

  • Under insurance clause being applied by the insurers in the event you have not insured for the correct replacement values

  • Exclusions and clauses being applied to the coverage resulting in diminished cover or no cover for losses you may have thought were covered

  • You will be liable for legal defence costs if you are not adequately covered for Public Liability exposures, or have had exclusions applied (eg sub contractor exclusions)

Many tradesmen know they need cover for their tools and equipment, their vehicles and even their business premises, and that Public Liability is an absolute must. But there are other risks and insurances available they may not be aware of where significant exposures are present.
Examples include:

  • Business Interruption, acts like business income protection

  • Professional Indemnity, if you give advice

  • Income Protection, Accident and Life covers that protect the individual and Key Person

  • Cyber Liability, especially with using online payments

  • Credit Insurance, if your debtors go bust

  • Management Liability, to protect company directors/officers against personal financial risks

Not every business needs every kind of cover however a reputable insurance broker will talk with you about your business and what’s happening in your industry to determine the level of exposure you have and provide you with the appropriate advice to cover off these exposures.

Article supplied by EBM. As one of Australia’s leading privately owned and operated insurance brokers EBM has insurance solutions to suit you. For more information please visit www.ebm.com.au or phone 03 9425 189

Top insurance tips Pinching pennies isn’t worth the risk when inadequate insurance can leave you exposed to multi-million dollar claims.

  • Make sure your subcontractors carry their own workers’ compensation and public liability insurance. Insist on obtaining a copy of their certificates of currency. To be on the safe side call and check that the policy is valid and for the amount stipulated.

  • Carefully read your insurance policies, schedules and product disclosure statements to confirm that the insurance product is right for you. For instance, it’s not unheard of for insurers to exclude claims relating to drop saws for carpenters or restrict cover for glaziers where they’re working above two storeys, but for these provisions to be buried deep in a policy.

  • Get quotes from all of the available insurers in the market. However, don’t take out the cheapest policy just for the sake of it—it may not save you money in the long run.

  • Consider using a broker. Brokers do not work for insurance companies— they work for their clients, providing advice on the best insurance options and work to get claims paid. They’re also familiar with the requirements for having claims paid out, which is invaluable for a number of reasons aside the obvious, including the fact that where a claim is declined there is an obligation to disclose the same for seven years.

  • When researching insurers, check out their claims ratings and don’t go for an insurer with less than a four-star plus rating.

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