Cashies skirting

Here at Trade Risk we are very proud to assist thousands of tradies every year with their insurance needs.

Not only is it a good thing for the tradie to be protected, but it’s also very important for their clients to have the ability to claim if they suffer a loss due to property damage or personal injury.

Whilst we and many other similar insurance brokers do our best to promote insurance to tradespeople, unfortunately there are still many out there who are putting Australian families at risk by working without insurance.

Isn’t insurance mandatory?

Surprisingly, for most tradespeople it is not mandatory to hold insurance that protects the general public in the event of personal injury or property damage.

There are certain trades such as electricians and plumbers who must hold public liability insurance, but the majority of trades have no requirements in place when it comes to insurance.

Many of the large building and construction companies have their own minimum insurance requirements for their tradespeople, but this does not apply to tradies working outside of the big worksites.

Our research

Over the last ten months we have been surveying tradies who request quotes from us, but subsequently choose not to take out any insurance.

The results of the survey, which was conducted during 2012 and 2013 and included over 240 respondents, revealed some startling results.

Of those tradies who chose not to take out any insurance at all, either through Trade Risk or anyone else, 28% of them did so because they believed they did not require insurance.

For over a quarter of respondents to believe that they don’t need insurance to protect their customers is definitely concerning, especially when the majority of people surveyed are either running their own businesses or subcontracting to others.

What is even more concerning is that all of the tradies had come to us at some stage for an insurance quote before deciding they didn’t need it.

Who knows how many more tradies are out there operating without insurance who never even bother to get a quote? We believe the number would be much higher.

A further 19% of tradesmen agreed that they needed insurance, but chose not to take out any cover due to the cost being too high.

We totally understand that costs are an issue for all business types, but when you consider that adequate insurance would cost around $40 per month for most of these tradies, there is just no excuse for putting clients at risk by working without insurance.

As for the remaining 53% of respondents who selected ‘other’ there were a range of manual responses given. Some of these were reasonable, whilst others were quite concerning.

One of the most concerning responses was from a tradesperson who believed their car insurance covered them for public liability.

Whilst car insurance does include public liability cover, this is only in relation to damage caused by the vehicle and provides absolutely no cover for a tradesperson’s business activities.

Overseas experience

Whilst we couldn’t find any local research on the effects that uninsured tradies are having on householders, we did find some information from the UK.

The oddly named insurance website reported that research conducted by Sainsbury’s showed up to 1 in 5 tradespeople operating in the UK are doing so without public liability insurance.

They also reported that up to 590 million pounds worth of damage is caused by uninsured tradespeople in the UK every year.

Half a billion pounds is an extraordinary amount of money, and it would be safe to assume that the vast majority of those costs must be met by the homeowners rather than the tradies who caused the damage.

Risks for homeowners

The risks for homeowners who use uninsured tradespeople are considerable.

Whilst a tradesperson will be financially liable for any property damage or personal injury they cause whilst working, without insurance it can be difficult for a homeowner to obtain any form of compensation.

Using the courts is one option for seeking compensation for the costs of repairs or medical expenses, however there is nothing to stop a tradesman from declaring bankruptcy in the face of a large claim against them.

What does the insurance cover?

The specific form of insurance we are talking about here is public liability, which is the most commonly held form of cover by tradies.

This insurance will cover the costs of a claim if a tradesperson’s work activities result in damage to your property or personal injury to you, your family members or guests in your home.

Defective or faulty workmanship is covered, but only the resulting property damage or injury. The costs associated with rectifying the defective work are not covered by public liability.

The costs covered by the insurance can include anything from repair or replacement of damaged property, through to medical, rehabilitation and other forms of compensation in the event of injury or death.

Is an uninsured tradie a bad tradie?

There is no research we know of that links being uninsured with performing work of a poor standard.

I personally have spoken with a handful of tradies over the years that take a huge amount of pride in their work, but refuse to take out insurance because they believe they will never need to claim.

These are generally the older and more experienced tradesmen, but as I say to them, things can go wrong no matter how skilled and careful you are.

One mistake on a job which puts someone in a wheelchair for the rest of their life will wipe out everything you’ve ever worked for if you don’t have insurance in place.

Whilst there is nothing to say that all uninsured tradies are bad tradies, it is probably a safe bet that most ‘bad’ tradies don’t bother with insurance.

Checking a tradie’s insurance

If you’re a homeowner looking to have work performed on your home by a tradesperson, it is absolutely vital to ensure they are properly insured.

Checking a tradesperson’s insurance is as simple as asking them for a copy of their certificate of currency and checking that the details match up.

Any good tradie will be more than happy to provide you with a copy, and if they refuse your request, then you need to seriously question whether or not you want this person working in your home.

Most good tradesmen will have the right insurance in place, and confirming their insurance coverage will give you peace of mind knowing that you and your family will be looked after financially if something goes wrong.