Take cover

Discover the key requirements of small business insurance coverage in the construction industry.

By Kerryn Ramsey

The best way to protect everything that allows you to operate your business is with effective insurance. Some insurances are obligatory while some are optional, though highly recommended. Here’s what you need to know…

MANDATORY COVER

Workers compensation and builders home warranty are legislated insurances that are non-negotiable and regulated by governing bodies.

Workers compensation is a requirement of any trading entity that has employees. Builders home warranty is for residential builders or renovators. It provides a warranty on their works in the event that they are no longer trading or available to rectify works in the years after the property is sold.

“Business owners need to be aware of both and be compliant,” says Jared Gilkison, director and senior account manager of R&M Insurance Brokers. “A breach of either of these can result in trading restrictions, large fines, and loss of licences.”

Other obligatory insurances for companies are public liability and third party on company vehicles. Each of these addresses your obligations to someone else. Public liability covers you if a third party is injured as a result of your business activities. Third party on vehicles covers you for personal injuries arising from the use of vehicles.

“These types of insurance are often more important than insuring your own property,” says Gilkison. “It’s impossible to quantify or control what someone else might demand from you if you injure them.”

TOOLS OF THE TRADE

Tools, machinery and equipment are what enables a job to get done and keeps the money coming in. Without the right tools, everything stalls. While not compulsory, it makes sense to have these items insured for loss, theft or breakage.

“Trade tools are very expensive and costly to replace,” says David Turner, chair of HIA Insurance Services. “A tradie purchases many tools over their working life, but if they are stolen or accidentally destroyed, it may not be possible to replace them all at once. This will cause business interruption and prevent them from earning to their full capacity.”

The cost of replacing an item, of downtime and of hiring replacement items are all covered by different insurances. It’s important to know which you want to insure against in order to achieve the desired risk management.