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Finding the right protective cover is absolutely essential for tradesworkers. The nature of trade work often sees them exposed to an increased level of risk to other working environments resulting in hundreds of Australian tradesworkers being forced out of work due to unexpected injury each year. Income protection insurance is often referred to as illness and accident insurance though they are quite different in the type of cover that they provide.
Many insurance types fall under the category of trades insurance. Some trades need only public liability insurance, while others need to cover tools as well. The ability to earn is the most important asset a tradie has. Having life insurance and income protection should be part of the trade insurance pack that is in place those who value that asset.
This guide will discuss some of the different types of cover that are worth considering for tradesworkers.
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More about Tradesman Insurance
- What types of tradesmen are covered?
- What Types of Business Cover do Tradesmen Generally Require?
- Benefits of Public Liability Insurance for Tradesmen
- Benefits of Tool Insurance for Tradesmen
- Home Warranty Insurance for Tradesmen
- How to compare trade insurance policies
- Trade Insurance FAQs
- Make an Enquiry for Tradesman Insurance
What types of trades are covered?
Trades insurance typically provides cover for quite a wide range of occupations. Pretty much anyone you might regularly find on a building site is covered under this type of insurance policy. The exact nature of occupations covered can differ from one insurance provider to the next, but those jobs usually covered include:
- Residential builders
- Shop fitters
- Mobile mechanics
This is by no means an exhaustive list, so speak to different insurers to find out exactly who they offer cover for.Back to top
What types of business cover do tradesworkers generally require?
- Public liability
Public liability covers damage a tradie causes to someone’s property. If someone suffers an injury or incurs some other loss due to a tradie’s work, public liability insurance will offer protection for legal expenses incurred.
Some damage may only cost hundreds of dollars. That amount may not break the bank. If property is completely destroyed, the story may be a little different. The bill can be in the thousands of dollars. If death or serious injury is caused, it is not out of the question for a court to award millions of dollars in damage. Public liability covers these situations.
- Product liability
Product liability insurance pays all amounts that a tradie becomes liable for as a result property damage or personal injury in an accident related to his or her product. Bad workmanship is excluded from this cover. So if a loss is suffered because the manufactured or supplied product was inferior or faulty, is not covered.
Product liability is normally limited to tangible personal property. Retailers, suppliers, distributors and manufacturers should carry product liability insurance. A very common product liability claim is negligence.
- Equipment breakdown insurance
Any unforeseeable or sudden damage to machinery is considered equipment breakdown. Equipment breakdown insurance replaces, repairs or pays a momentary amount equivalent to replacement or repair costs of the equipment. If necessary parts are unavailable or obsolete, estimated cost of parts for similar equipment is paid. Incidental expenses that are incurred due to equipment breakdown are compensated. Two of these incidentals include transportation or labor involved in the repair or replacement of the equipment.
Maintenance, overhauls, improvements or alterations are not covered. Damage to business property or property belonging to someone else, caused by flying fragments of damaged machinery is paid.
- Fire and defined events
In the event that a business suffers damage or loss due to fire, the impact of a fallen tree, malicious damage, storm related damage, earthquake, explosion or lightning, fire and defined events will cover necessary expenses. Rainwater or runoff from rainwater, hail, sleet or snow, tornadoes or cyclones and wind are the limits of weather related damage.
Impact from vehicles, hovercrafts or watercrafts which causes damage falls under this cover category. A building that falls from anything other than demolition, falling branches and trees are sources of damage covered under the impact clause. Also included is damaged caused by animals or aircraft.
- Personal accident insurance
Should an insured party suffer illness or injury that causes prevention of normal work duties, income is protected. Self-employed individuals, who have no sick leave access, can find great security in personal accident insurance. The person named on the schedule will receive the lump sum benefit stated on the policy.
The insured can chose to have only accident cover or accident and illness. No coverage for illness alone is available. A weekly benefit policy can be set up for accident only cover. Partial or total disablement will spur a weekly benefit payment in this case.
- Motor Vehicles
Motor vehicles cover insures motor vehicles and mobile plants needed to operate a business. There are different types of motor vehicle insurance. Compulsory Third Party insurance is mandated in all territories and states. It provides compensation for bodily injury or damage to another party’s property that is the result of the policy owner’s vehicle.
Comprehensive insurance covers weather damage, malicious damage, theft or collision damage. A policy may be written to cover damage to other vehicles. Limited insurance that covers only theft or fire is also an option. Sometimes an extension is offered that covers damage caused by a vehicle that is uninsured. Three to five thousand dollar limits are usually applied for this type of cover.
Burglary cover pays the insured if an unknown party break into the premises, owned or rented by the insured and steal equipment, stock or contents. Loss or damage is compensated for items, content and stock specified on a cover schedule. Extras cover is also provided.
Extras generally include the following;
- There is an automatic reinstatement of the sum insured amount if a claim is made
- The cost of reasonable and necessary temporary protection is paid. This includes hiring watch people or guards for the protection and safety of the building until damage is repaired. Replacement of combinations, locks and keys is paid if they are stolen or suspected of being duplicated
- Reasonable cost of opening strong rooms or safes, because keys are stolen, is also covered
There is typically a $5,000 limit on extras payment.
Money cover protects money stolen. The protection is for loss or damage that occurs when the policy is still in force. Money can be lost or damaged in transit, on the worksite during and after business hours or in custody of the insured. If the money is secured in a locked strong room or safe, not only the money lost or damaged, but damage or loss to the security measure is covered when actual or attempted theft occurs.
Extras cover is also provided. There is an automatic reinstatement of the insured sum. Reasonable and necessary costs that affect temporary protection to safeguard money on the premises because of actual or attempted theft are also paid.
- Multiple risks
Multiple risks cover extends to damage or loss of specified property items anywhere in New Zealand or Australia. The insurer is licensed in both countries. Their agents are viewed as strategic partners. Time consuming and unnecessary layers of underwriting are eliminated.
Multiple risk managers handle surety accounts that are considered standard for specially trade contractors, utility and municipal contractors, highway, industrial and heavy contractors and general builders. Service and supply are included in specialty surety accounts. Also included are design build, hazardous materials and environment remediation contractors. Almost all commercial surety bonds are provided.
- General property insurance
General property insurance provides cover for damage or loss of insured property that the insured takes with him or her in the course of business conducted any where in the world. High value items will usually need to be specified on a policy schedule.
As an additional benefit, insured property of another, while in the legal or physical control of the insured during a burglary, is covered. The property must have been securely stored and consequent loss must be due to violent and forcible entry.
- Goods in transit
Goods in transit insurance covers damage or loss of goods being transferred because of a specified event. These are goods the insured uses in business, buys or sells.
This type of insurance will generally cover:
- Jackknifing or fire
- Forced landing or misadventure of aircraft
- Impact from some source other than the conveying vehicle
- Washing overboard or jettison
- Violent a forcible entry of an unattended transporting vehicle and war related activities
- Damage or loss during unloading or loading
- Labour disturbances
- Poor packaging
- Damage while on display
- Interrupted transport because of carrier financial problems
When a policy lists “Glass” under “Sections Insured”, damage or loss of glass owned or held legally responsible for by the insured, is covered. The following reasonably incurred costs are protected:
- Temporary shuttering necessary prior to replacement
- Replacing connections
- Burglar alarm tapes
- Reflective materials
- Ornaments or sign writing attached to glass
- Cost value of stock spoiled by damage or loss of glass
- Repair or replacement of fittings
- Showcase frames
- Doors and windows and window film or tinting replacement costs
Perplex or plastic signs are also covered. The replacement of glass will be similar in manufacture and quality of the original glass. Minimum requirements set by statutory authorities will be met as an extra cost if necessary.
- Tax Audit
Should an agency or body, authorised to conduct a tax audit, call for an investigation or review of a business’s tax affairs, professional fees will be covered. The agencies or authorities include: The Commonwealth of Australia Tax Office or a department of a Commonwealth, Territory or State Accountant fees are examples of professional fees covered.
The fees are those to be considered reasonable and necessary in connection with the audit. An extra benefit included is automatic reinstatement of the insured sum. There is optional insurance to cover personal income tax audits if the insured works in the business full-time.Back to top
Benefits of Public Liability Insurance for tradesworkers
The greatest benefit of Public Liability Insurance is to help avoid financial losses and prevent becoming insolvent. As an example, consider accidental spills that spoil property in some fashion. It is the responsibility of the business owner to replace damaged goods. That kind of claim is fairly minor. Liability insurance would cover the cost or repair and the cost of replacing the substance that was spilled.
A more serious circumstance would occur if work done by the tradesman, turns out to be faulty. The product is destroyed and someone is injured. The tradesman is responsible, in this case, for the faulty product and the injury that occurred.
Without the benefit of Public Liability Insurance, the tradie could incur millions of dollars of out of pocket expenses. Legal fees and compensation are expected. The circumstances could become worse if legal action is taken against the tradesworker. They could become insolvent and unable to afford support for themselves. The design or Public Liability Insurance limits this kind of risk. Even if major financial demands are made, a tradie can continue to run their business.
Financial protection in the event a tradesman or his company causes losses or damages to some third party is provided by Public Liability Insurance. The cause can be due to negligence or be accidental. Some trades like plumbers and electricians are required to carry Public Liability Insurance.Back to top
Income and workload can be greatly affected by the loss or damaged of tools used in a business if a tradesworker does not carry Tools of Trade Insurance. Loss of finance is the biggest impact. Hundreds even thousands of dollars may be needed to replace or repair equipment or tools.
- Impacts of loss of tools
- Labourers and contractors need to work longer to complete a job
- There can be penalties and fees assessed for failure to complete a project on time
- Legal cost may arise, if a client takes legal action, when a project is not completed or begun as promised
- Business profits plummet
- In dire cases, a tradie can be left insolvent
Without the proper tools and protection of tools insurance, projects may not be able to move forward. Schedules and deadlines may have to be changed until tools are fixed or replaced. Sourcing tools and balancing expenses may become necessary.
Delaying a project might spur a client to look elsewhere to get a job finished. Loss of a customer and damage to a tradesman’s reputation can ensue. Postponing one job pushes the time table for future projects that are lined up, back also. Future earnings can greatly be affected. The business can be lost altogether.
Home Warranty Insurance for tradesworkers
The state has regulated that contractors, renovators and builders who complete construction of residential projects must carry Home Warranty Insurance if the project exceeds a specific dollar amount.
Work cannot begin on these projects until Home Warranty Insures is in place. Each state in Australia has its own threshold that makes Home Warranty Insurance compulsory. NSW has a $20,000 threshold. In most other states, the threshold is $12,000. The only state, where Home Warranty Insurance is optional, is Tasmania.
The insurance protects the client financially in the event defective work is produced or if circumstances that prevent work from being completed arise. Future homeowners of the property are also protected for a mandated period of about six to seven years. There are positive aspects for tradie’s and builders also. Builders establish themselves as professional, trustworthy, law-abiding tradesmen.
Business is gained. Most people refuse to hire someone who does not carry Home Warranty Insurance. Harsh government penalties are avoided. These fines can cost thousands of dollars.
Tradespeople will want to use an insurance provider who understands the requirements of Home Warranty Insurance. Providers should be experienced and know the requirement of Home Warranty insurance in each state. The legislation is meant to protect consumers. The insurance is compulsory. The wrong cover can attract large fines.
Owners building homes for themselves are required to buy Home Warranty Insurance only if the home will be sold within a certain time frame after construction or renovation is complete. Most sellers do not become aware of the statute until notified by a conveyance company or their lawyers. Time periods differ from state to state. WA has a seven year time period. Victoria and NSW have a time period of six years.Back to top
How to compare trade insurance policies
- Assess the risks you face. A vital step to take before you even start comparing policies is to assess the risks you face when conducting your regular work. What is the likelihood of something going wrong and resulting in you making a claim? What would the financial consequences be if you did not have any cover in place? Taking the time to answer these questions can help you work out exactly how much cover you need to take out.
- Research policies on offer. Finder.com.au offers a stack of online resources to help you compare tradesman insurance policies. Consider the level of protection offered by each policy. Are your tools covered in any location, or only if they are locked away securely? Will one policy pay out much more for a public liability claim than another? The level of cover differs from one policy to the next, so it pays to do your research and shop around.
- Compare quotes. Track down quotes from a number of insurers to compare the prices on offer. Of course, you also need to look at features other than the price in order to determine exactly what you will be getting for your money. Read product disclosure statements closely to examine benefits, features, limits and exclusions.
- Speak with a broker. If you need help finding the right type and level of cover, an insurance broker can offer insurance advice that is specifically tailored to the needs of you and your business.
Trade Insurance FAQs
How can I save money when shopping for insurance cover?
Due to the wide range of risks tradies are exposed to, there’s quite a wide variety of insurance cover you need to consider. It’s often possible to group some of these forms of cover together under a single policy, so speak to your insurance provider to find out how you can do this and enjoy a reduction in premiums.
Which forms of insurance are most common for tradespeople?
Generally speaking, public liability, income protection and tool cover are the most commonly held forms of insurance. However, depending on the size and nature of your operation and the work you do, the type and level of cover you need can vary greatly.
Will my public liability insurance offer cover for sub-contractors?
No. It’s vital to check that your sub-contractors have their own public liability cover in place before you allow them to start work on a building site.
I’m strapped for cash and struggling to pay my premiums. What can I do?
Some insurers will allow you to pay your premiums by the month to help with your cashflow. It’s also a good idea to seek expert advice from a broker to see if there is any way to reduce your premiums.
Tradie insurance is confusing. Where can I find help?
Finder.com.au offers a wealth of information to help you compare a range of policies. It’s also a good idea to seek expert advice from an insurance broker who can assess the insurance needs of your business and find a policy to match.
Make an inquiry for tradesworker insurance
If you are interested taking out cover to protect your occupation as a tradesman, it is worth speaking with an insurance consultant about the different cover options available. With so many different types of cover falling under the category of tradesman insurance, tailoring your cover and finding the right options by yourself can be complicated. An insurance consultant will help you compare the different options available and provide you with a preliminary quote based on your details. Once that is complete, they will assist you through the entire application process.Back to top