WHY TRADIES NEED TO INVEST IN INSURANCE
We get it. It feels like there are enough things in life that require insurance these days that you couldn’t possibly stomach the thought of another. However, there are some insurance policies that you simply can’t go without. You’ll be kicking yourself later down the track if you realise you haven’t signed up for the ones you need.
One such policy is tradesman insurance – it’s something every tradie needs to get around. We’ve compied a list of the more common types of tradie insurance in order to help you get a better understanding.
Income protection insurance – you’re protected in the event of a worst case scenario
This will be the first type of insurance your broker recommends to you, and for good reason. There are a huge number of worst case scenarios that can go down when you’re a tradie, and just one of them can be enough to ruin you permanently. Consider this scenario: you’re working on a dangerous construction site and you’re involved in a serious accident that leaves you unable to work for a number of months. During that time, you don’t receive income because you physically can’t complete any work. You’re a self-employed tradie, which means you’re not covered by worker’s compensation or sick leave. Depending on how long your recovery is and how expensive your medical bills are, you may never recover financially, which would place you in a problematic position. You’re essentially on your own.
Income protection insurance covers you in the event of such an injury and pays monthly benefits to cover the cost of your lost wage. Similar policies include trauma, total & permanent disability cover (TPD) and life insurance in the worst case scenario that you are permanently disabled, experience a critical illness or die. These policies are designed to safeguard you and your family financially and keep you afloat in the event that you are unable to work.
Public liability insurance – what type of cover do I need?
This form of insurance covers you in the event that you or your equipment causes personal injury to a third party, or damages their property. Not including your own employees, this insurance covers your legal liability if, for example, the owner of the home you’re working on trips over your tools and injures themselves. Those who are not covered are in danger of being sued and may be without resources to cover such an expense. Insurance packages range from $5 million to $20 million and are able to cover even the most serious accidents.
It doesn’t matter if you’re a solo worker or the owner of your own building business; every tradie needs public liability. In some states, it’s a nonnegotiable prerequisite to becoming a registered building practitioner or plumber. Deciding on the right insurance policy for you is a case by case situation and something best discussed with your insurance broker, accountant or lawyer. Many business owners tend to opt for the $20 million insurance limit as a cautionary step to ensure they’re covered in a worst case scenario. As such cases are rather common, it’s wise to consider your decision carefully.
Tool & vehicle insurance
Tradies can also insure their tools or vehicle in the event of theft or damage, to protect their livelihood and ability to make an income. Whilst a few odd tools here and there might not amount to much, you will find that the entire value of your toolkit might lead to a hefty bill when it comes time to replace everything. The total worth is the amount (give or take) that you should be ensuring your tools and equipment for. Not to mention your work vehicle, which is a pivotal component of your day to day operations.
Different insurance requirements in each state
Depending on the state you work in, there may be certain requirements when it comes to taking out trade insurance. In Victoria, for example, the VBA requires any registered builder or plumbing practitioner to have specific insurance depending on the class of licence they intend to apply for. These insurance policies include domestic building insurance, professional indemnity insurance and public liability insurance. For more information on which building classes require these policies in Victoria, visit the VBA’s insurance information page. Please consult your local broker for information and advice specific to your location and individual circumstance.
Insurance makes you appear more attractive to prospective employers
An important point to note is that many construction companies will require you to have your own insurance if they are to consider you for a job opening. Regardless of state, this is to ensure they are not liable for your actions in the event of defective plumbing, wiring or other workmanship.
This article is provided as general information only. For specific advice on your individual circumstance, please speak to your lawyer, accountant, or employer.