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Do Tradies Need Professional Indemnity Insurance?

Do tradies need professional indemnity insurance for their business? This depends on what business activities you are undertaking within this business. Most people don’t actually fully understand what professional indemnity insurance is designed to cover. Once we know the answer to this question then it’s much easier to determine if you’re asking yourself “do tradies need professional indemnity insurance?”
 
Professional Indemnity covers advice that you are providing which would cause a financial loss. The intention of a professional indemnity insurance policy was to cover an adviser or qualified professional to give instructions to a third party on how to repair a building, how to build a house to specific design requirements or signing off on the work of a tradesman. As businesses have developed and progressed you now find many business owners doing a wide range of activities that the need for Professional Indemnity insurance has increased to being needed by more and more business owners. 
 
If you are only doing general trade work then there is a good chance that you do not need professional indemnity insurance. I say this cautiously because this is not a comment that should be taken generally. If you are providing any form of certification or compliance sign offs then yes, you do need professional indemnity insurance. 

Are you designing and constructing? If so, you need a design and construct Professional Indemnity and Public Liability policy.

To make it even more difficult to answer whether you need professional indemnity insurance or not there are many more conditions that you need to consider. Most professional indemnity insurance for trade contractors will put exclusions in place that prevent you from providing advice to a client and then also conducting the work related to this advice. If you are designing and constructing then you need a specific design and construct PI policy. Most insurers will put this exclusion in place because of their exposure to being recovered on. For example, if a trade contractor has constructed a roof and followed the design advice from an engineering company that designed the roof to meet cyclone standards. If the roofing contractor followed the design correctly than should a claim arise against the roofing contractor then their insurer would usually be able to recover these claim costs from the engineering company. If the roofing contractor offered a design service and then constructed to this design then should something occur, the roofing contractors insurer likely has no one else to recover costs from and the full claim costs would need to be paid from them.
 
If you find yourself searching online for an answer to “do tradies need professional indemnity insurance” what I would recommend is instead of typing this into Google open up your emails and send it to an insurance broker.

Information online about Professional Indemnity insurance is general only, seek personal advice to get the right information.

Purchase up to six products under one Business Insurance Package. 

The Diploma of Insurance Broking is deigned to equip individuals with the skills necessary for managing broking teams, handling new business submissions, and providing quality insurance services and advice to clients.

This unit focuses on teaching the skills and knowledge required to assess clients’ insurance needs and accurately advise them about retail general insurance products and services.

If you find yourself searching online for an answer to “do tradies need professional indemnity insurance” what I would recommend is instead of typing this into Google open up your emails and send it to an insurance broker.

Information online about Professional Indemnity insurance is general only, seek personal advice to get the right information.

I’ve just explained the exact situation above that you are exposing yourself to. If you read articles online and then walk away going “I don’t think I need it” or “this doesn’t relate to me” or “I don’t do design work so I don’t need it”. If you decide this yourself and then a claim arises which would have been covered under a professional indemnity insurance policy then all you can do is kick yourself for not getting specific advice. If you at least contact an Insurance Broker you’ll have a 30-minute phone call or exchange a couple of emails and you will get an actual answer to your question “do tradies need professional indemnity insurance” that is tailored to your business.
 
Professional Indemnity insurance for tradies can be extremely beneficial to your business as claim costs continue to increase. Unfortunately, more often than not trade contractors only find out that they need an insurance policy is when a claim occurs. This usually turns into quite an expensive lesson. 

General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

All information above has been provided by the author.


Priority Insurance Brokers, ABN 95 655 563 616, AFSL 233750

This article originally appeared on Priority Insurance Brokers and has been published here with permission.

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