We’ve been helping tradies and builders with their business insurance for over a decade, and during that time we’ve seen a thing or two!
If you’re in the process of sorting out your business insurance for a start-up, or looking at the renewal for your established business, this guide should be of benefit.
What do tradies get wrong when buying business insurance?
5. Target fixation
If you’re a motorbike rider you’ll be fully aware of target fixation. It’s where you’re so focused on an object that you increase your risk of colliding with the object.
A similar thing can happen when shopping for business insurance.
You might have been told that you need public liability insurance, so you go hunting for that specific type of insurance without considering anything else.
If an insurance company or broker (like Trade Risk) suggests any other type of cover, you assume we’re just trying to upsell you, or we’re distracting you from your target of finding public liability.
The truth is, we just want to make sure you’re properly covered.
We never want to say to a client “sorry your policy doesn’t cover that” when you call us to lodge a claim for something that isn’t covered by public liability, but could have been covered by a different policy.
So you might think that public liability is the solution to all of your problems, but listen to the experts. You don’t have to accept our recommendations, but at least you can make an informed choice.
4. Assuming that all policies are the same
Sticking with the public liability theme, a common mistake we see is that tradies (and business owners in general) think that all policies are basically the same.
They think that if two policies offer $10 million public liability cover, but one costs $500 and the other costs $800, clearly the more expensive one is a rip off.
The truth is that public liability policies can vary hugely once you do a little digging.
A great example is the “worker-to-worker” excess. If you cause injury to another worker on a worksite, some policies will charge you a standard excess of $250 or $500, whilst others may have a specific worker-to-worker excess.
How much are we talking? This excess can be anywhere from $5k to $20k, even for a very small policy! So that couple of hundred you saved on premium could cost you thousands at claim time.
Plenty of good policies do have a worker-to-worker excess, so it’s not a bad thing, but it’s something you need to be aware of when comparing policies.
Another key difference in public liability policies, especially for tradies, is working at heights.
Many common policies have a height limit of 10 or 15 metres. If you’re working at heights greater than that, you won’t be covered.
But there are plenty of policies which have higher limits, or even no limits. Unless you dig into the policy wording you won’t know this.
Again, the difference in premium might only be a few hundred dollars a year, but could be the difference between a successful claim and a declined claim, which could be worth tens of thousands of dollars – or more.
So never, ever assume that two public liability policies are the same. There will almost always be differences; sometimes very minor and of no real consequence, but sometimes they could be huge.
3. Thinking that having everything with a single insurer is cheaper
We often have clients who insist on having all of their policies with a single insurance company.
They assume that having their public liability, tool insurance and personal accident insurance will be cheaper or somehow better.
The truth is that it is very rarely the best option.
The insurer with the cheapest and/or best public liability policies won’t necessarily be the same as the best options for tool insurance or car insurance etc.
As an insurance broker, we can pick and choose which insurer or underwriter to use for each of the different risks in your business. This could be based on how good the policies are, and of course how competitively priced they are.
The good part about using an insurance broker like Trade Risk is that you can still have a single point of contact even if your policies are spread across a number of different insurers.
Our largest clients might have policies with four or five different insurance companies, but they have a single account manager at Trade Risk that handles everything for them.
4. Using multiple insurance brokers
Whilst using multiple insurance companies can be a good thing, using multiple insurance brokers generally isn’t.
The assumption amongst tradies and other business owners is that “shopping” brokers against each other will result in a better deal.
The reality is that all insurance brokers have access to the same insurance companies and underwriters, and the pricing is essentially the same no matter where you go.
If you’re not happy with the service from your current broker that’s a completely different matter, and you should definitely find someone better (like us!)
If you are happy with your current broker’s service, but just want to make sure you’re getting a good deal, go and ask them.
A good broker will be able to let you know which other insurers they obtained quotes from, and why the one they recommended to you was the best option.
If they can’t do that, then find another broker.
5. Thinking they can DIY their business insurance
As qualified tradies or builders, it’s easy to joke about “DIY disasters” or the client who says “I can do it cheaper myself”.
You’d never recommend that a client DIYs their building or renovation work, yet many tradies think that they can DIY their business insurance.
It’s easy though right? Just go online, punch in your details and choose the cheapest price. Or maybe to be safe you select the “middle option”. Not the cheapest, but not the most expensive either.
But unless you’re reading the policy wordings and exclusions for each policy, and fully understand what they mean, you’re no different to a home handyman doing his own plumbing work based on YouTube videos…
Sure, plenty get it right and will never have an issue, but sometimes it goes badly wrong and you can lose everything.
So think about how seriously you take you business. If your business isn’t that important to you, go with the DIY approach and hope that you’ve gotten it right. After all, you might be just fine.
But if you take your business seriously, and if your business is your life’s work (as it is for me) then trust an expert such as our brokers at Trade Risk.
It might cost you a little more (or it could cost you a little less) but you’re going to sleep at night knowing that your business is properly protected. Bottom line – don’t DIY your business insurance if you actually care about your business!
To speak with one of our trade and construction specialists please call us on 1800 808 800 or contact us online.
