When starting your own trade business there are so many things to think about.
The first is probably whether or not you’re going to make enough money to pay the bills!
Somewhere on your list of things to do, or at least consider, is insurance.
Switching from a tradesman to a business owner is a big deal, and there can be a lot at stake, including perhaps your house.
In this guide we’ll run through some of the insurance types that a new trade business should consider, and which ones may be more important than others.
Public liability
The first type of insurance on any
self-employed tradie’s list needs to be public liability.
No matter how large your business is going to be, whether it’s just yourself or a team of twenty tradesmen, public liability is a necessity.
This is the one policy that is going to save your backside (and maybe your house) in the event that your business causes property damage or personal injury.
If the work of you or one of your staff was to result in the serious injury or death of a third party, you could be liable for hundreds of thousands or even millions of dollars in compensation.
Without public liability insurance this would quickly see the demise of most small to medium sized trade business.
You may also require public liability in order to obtain your licence if your trade is electrical or plumbing related.
Additionally, if you are a Queensland electrician or Victorian plumber you will need a special option on your policy known as consumer protection cover.
Many of the larger building companies require that all contractors have public liability in place, so you may have no choice but to take out cover.
Property
No matter what trade you’re in or what size your business is, your business is going to own some property.
For a small contracting business run out of a couple of utes we may be looking at basic tool insurance.
For larger businesses we may be looking at a workshop full of stock, equipment and other contents.
Either way it is important to insure your property so that if you lose some or all of it, you are not left out of pocket.
There are a range of covers that can assist here, from general property for your tools, through to fire, theft, flood and even money if you are operating from premises.
Are you employing staff?
If your business is employing staff you will need to hold workers compensation insurance.
Even if you aren’t employing staff, but are listed as the sole director of your company, you will still be required to hold workers comp in some states.
This type of insurance is mandatory in all states and territories of Australia, and is tightly regulated by each of the state governments.
In some states you can take out cover via a broker, whilst for other states (such as Qld) you must take out cover directly with the state authority (which for Qld is WorkCover).
Workers comp will assist your staff in the event that they suffer an injury whilst working for you.
Are you taking on large projects?
For trade business entering into building contracts there may be a need for contract works insurance.
Many tradies may be surprised at just how much responsibility they are taking on when they sign a contract.
In some cases you may be responsible for a whole lot more than just your part of the overall building project.
It is a common misconception that public liability will cover you for any property damage that occurs on a building site.
However, public liability only covers you when you or your staff have been negligent, and it is this negligence which has caused the damage.
But what if something happens that had nothing to do with you, but at the time your contract stated that you were responsible for all or part of the structure?
This is where you can be exposed to major losses, but by having the right contract works policy in place you can protect yourself from these losses.
Protecting your own income
Workers compensation is all good and well for looking after your staff, but what about yourself?
As a self-employed tradesman or business owner (or a mixture of both) you should know that your income depends largely on your ability to work.
Income protection insurance can help to cover a large part of your income if you are unable to work for a period of time due to injury or illness.
More information
These aren’t the only types of insurance to be considered for a start-up trades business, but they are certainly a good start.
When going through the process of starting your business, we recommend that you speak with an insurance broker who understands your industry such as Trade Risk.
We will be able to run through your plans and ideas in order to recommend an insurance package that will suit your needs.
We completely understand that money can be tight when switching to self-employed, so our team can work to tailor a package that will also suit your budget.
If you’d like to have a chat with one our tradesman insurance experts please call us on 1800 808 800 or complete our online contact form.
