What types of insurance do tradies need?

Tradies perform a range of essential services to society including electrical services, plumbing, roofing, painting, plastering, tiling, bricklaying, fencing, earthworks and building services to name just a few. The saying “you can never be too careful” is used a lot by tradies and for good reason. Most tradies will know someone who’s had an accident or know of an incident where something terrible has gone wrong. Even for the most careful tradies, something can still go wrong. This is where the right insurance can help.

Here are the types of insurances tradies should consider:

1.      Public and product liability insurance

Public liability covers your business for legal and compensation costs if you are found liable to someone because you caused death or injury, loss or damage to their property, or economic loss due to your negligence (e.g. a passer-by gets inured on your worksite). Product liability covers your business for the supply of parts or materials, even in the form of services or repairs, that fail and cause damage, injury, or death (e.g a faulty water valve leaks causing extensive water damage). It is important that your business has the right liability insurance for the work you do, which can be quite complex. It is important to note that usually subcontractors need to have their own liability insurance policy due to policy wordings.

2.      Tools and equipment insurance

The common saying “a tradie is only as good as his tools” illustrates how important good tools (and equipment) are to a tradie to get the job done properly. This cover includes theft, fire, lightening, explosion, storm, water damage, earthquake, vandalism, impact by a vehicle, and accidental damage. It is important to note that not all policies cover accidental damage. You can cover your tools of trade, electronics such as mobile phone & laptops, and other equipment used in your business. Most policies require locking your tools and equipment when not in use. There are “open air” policies, but these policies tend to be very expensive.

3.      Construction insurance

Construction insurance also known as contract works insurance covers the risks associated with the construction of a building or structure. If you’re the principal builder or contractor, there are a quite a few risks to consider protecting with a construction insurance policy. There is the Material Damage section, which covers building materials, tools, equipment, plant & machinery to name a few. Then there is the Liability section, which covers your legal liabilities. Cover also includes professional fees, removal of debris, expediting costs, mitigation costs, escalation costs, government expenses and temporary protection to name a few, and it is important to have the right construction insurance policy tailored to your business needs. Construction insurance can be an annual policy or a single project policy depending on your needs.

Construction insurance also known as contract works insurance covers the risks associated with the construction of a building or structure. If you’re the principal builder or contractor, there are a quite a few risks to consider protecting with a construction insurance policy. There is the Material Damage section, which covers building materials, tools, equipment, plant & machinery to name a few. Then there is the Liability section, which covers your legal liabilities. Cover also includes professional fees, removal of debris, expediting costs, mitigation costs, escalation costs, government expenses and temporary protection to name a few, and it is important to have the right construction insurance policy tailored to your business needs. Construction insurance can be an annual policy or a single project policy depending on your needs.

4.      Commercial motor – work vehicles (utes) and trailers

Your ute and possibly trailer get you to work and around different jobs sites with your tools and equipment, which is vital for you to run your business. Commercial motor Insurance can be customised to meet each business’ requirements. This product includes Motor Trade / Driving Risk, Garage Risks, Mobile Machinery, Plant & Equipment, Hired In and non-owned Mobile Plant and Motor Vehicle, and Commercial Motor Fleet Insurance. Commercial motor can offer coverage for any vehicle used in your business from utes, forklifts and trailers through to trucks and vans.

5.      Income protection or accident & sickness disability insurance

Many tradies are required to provide evidence that they are either covered by income protection or accident & sickness disability insurance before they can enter a job site. Both income protection and accident & sickness disability insurance pay an ongoing monthly benefit if you are unable to work due to an accident or sickness, and both provide cover 24/7 and worldwide.

However, there are some important differences between income protection and accident & sickness disability insurance. Income protection is Guaranteed Renewable (Cover cannot be cancelled, and premiums cannot be increased due to any change in your health, occupation, or pastimes) and Fully underwritten (Underwriting, including your medical history, your occupation, and your pastimes, is assessed at time of application rather than at time of claim increasing the chance of claims being paid). 

Accident & sickness disability insurance is not guaranteed renewable nor fully underwritten, but unlike income protection has the option of an agreed benefit, which can suit you if you have highly variable income. Accident & sickness disability insurance also tends to be less expensive than income protection for older tradies. You also have the option for accident only cover for both income protection or accident & sickness disability insurance.

6.      Life, TPD & trauma insurance

If you have a “better half” or kids you might want to consider life insurance, which pays a lump sum benefit to your beneficiaries if you “kick the bucket” or to you if you are diagnosed as terminally ill (about the kick the bucket).

TPD insurance or total and permanent disability insurance pays you a lump sum benefit if it has been determined medically that you are unable to ever work again due to an injury or illness. TPD insurance should be considered in conjunction with income protection or accident & sickness disability insurance, as both income protection and accident & sickness disability insurance will stop paying an ongoing benefit after a certain period of time.

Most tradies opt for TPD insurance with the own occupation definition, which means the claim should be paid if you can never again work in your trade due to an injury or illness. Inferior definitions for TPD insurance exist, but do you really want to be told that the claim won’t be paid because, whereas you might never be able to work again in your trade, you can still work at Bunnings?

Lastly, trauma insurance should be considered particularly for tradies with established businesses that would continue to run and provide you with an ongoing income even if you are not working in the business, as the income earned would be offset against any ongoing benefits paid by income protection or accident & sickness disability insurance. Trauma insurance pays a lump sum benefit if you are diagnosed with one of over 50 medical conditions or defined medical events and is not offset by your ongoing income.