Most tradies know about the common forms of insurance for a trade business, but there is more to business insurance than just public liability and tools…

We recently surveyed all of our clients on a range of issues, and one of the comments that appeared regularly in the results was the desire to know about what other forms of cover are available.

Of course tradies aren’t sitting around looking for other types of insurance to spend their money on, but they still want to be informed about what is available that could help them.

So in this guide we’ll look at some of the insurance types that aren’t so commonly spoken about.  Here’s what we’ll be looking at:

  • Trade credit insurance
  • Professional indemnity
  • Management liability
  • Cyber insurance
  • Business interruption

The above list will grow over time as we keep adding to this guide.

We don’t want to bore you with a tonne of technical information about each cover, so instead we’ll just be going through the basics.  If you see anything that grabs your interest, we can have one of our specialists run through it over the phone with you in more detail.

Trade Credit Insurance

One of the biggest issues for a trade business is not getting paid.  Sometimes it’s an amount that is simply annoying, and sometimes it’s enough to bankrupt you…

You can do a few things to protect yourself from rouge operators, but sometimes even businesses that appear solid and reputable can go belly-up overnight.

Business Closed.

But did you know you can insure yourself against this risk?

That’s right, you can take out insurance which will cover you in the event that a business doesn’t pay you for a job as a result of that business going into administration or receivership etc.

It’s not cheap though, with premiums starting from around $10k per year.  It’s not going to be economical for a typical trade business turning over somewhere between $100k and $500k, but if you’re up over $1 million turnover per year, the price starts to make sense.

Whilst $10k is not a cheap premium to pay each year, you’d be glad you had it if a client fell over whilst owing you a couple of hundred grand.

For more information about trade credit insurance please contact us.

Professional Indemnity Insurance

Professional indemnity is actually a very common form of business insurance, but not so much for trade businesses.

In some ways it is similar to public liability, but instead of covering your physical work, it is about covering your professional advice.

Broadly speaking, professional indemnity is more appropriate where you are providing professional advice to a client for a fee.  Common occupations and business types needing this cover are lawyers, accountants and consultants.

Whilst tradies are often providing advice to their clients, it is typically part of the overall job, and not something that is billed separately.

But if you are providing separate advice (including written reports) to clients, and especially if you are invoicing your clients just for the advice or report, then you should be considering professional indemnity cover.

We have a more detailed guide on professional indemnity insurance that you can access via the link, or you can contact us for a chat about your specific needs.

Management Liability

Whilst public liability is typically related to your physical work, and professional indemnity is related to the advice you provide, management liability insurance is more about the way you operate your business.

Criminal Court

It can cover costs involved in claims of mismanagement, HR issues, misconduct or alleged criminal behaviour.

These are typically (but not always) issues around the management of your business rather than your work with clients.

Management liability is uncommon amongst sole traders and small businesses, but as your business grows larger and more complex it can be a very important form of cover.

Cyber Insurance

In the good old days theft was more about your physical assets, which for a trade business was (and still is) primarily your tools and equipment.

That is still a massive issue, but now you also need to consider your digital assets.  This could include your website, your customer data and any other information you have stored online.

Hackers are targeting not just big companies, but also small businesses that may be more vulnerable to attack.

You might think cyber insurance is not necessary for a trade business, but consider what would happen if you lost access to your website and your customer data.  What if your customer data was stolen and exploited?  You could be open to big claims against your business.

In some cases cyber insurance can be added onto your existing business insurance for a fairly small cost, so it may be worth considering.

Business Interruption

Just like professional indemnity, business interruption is one of those insurance types which is actually quite common, but just not for trade businesses.

It can cover costs relating to lost revenue and relocation costs if the operations of your business are interrupted from an event that you are insured for.

What does that actually mean?

We’ll use the example of a cafe to start with, as it’s an easy one.

Say you run a cafe in a shopping strip, and a car comes off the road and smashes into your cafe.

Presumably (or at least hopefully!) you would have insurance to cover the cost of repairing your cafe, but it could take weeks or even months until the cafe has been fully repaired and is ready to reopen.

During that time you could run out of savings and end up bankrupt as a result of having no money coming in, but still having to pay rent (or mortgage) payments, tax bills, suppliers, staff etc etc.

There’s no point having a rebuilt cafe if you’re run out of money to reopen!

Business interruption insurance would save you by covering the lost revenue whilst the cafe is unable to operate.  This means you can keep paying your ongoing expenses and not suffer any adverse impact to your business.

Natural events can also result in a business interruption claim. Imagine the example above, but instead of a car crashing in it could be the result of a flood, storm, fire or anything else covered by your policy.

Flood Ranger

For a trade business it’s not quite as clear cut, as many trade businesses operate from utes and vans, and wouldn’t be impacted in the same way.

If you run a larger trade business though, especially where you operate from premises such as a workshop, then business interruption could become more relevant to you.

Work in Progress

No that’s not a type of insurance, we’re just saying that this guide is a work in progress!

We’ve started off by listing some of the more common (but uncommon) forms of insurance for a trade business, but there are plenty more still to add.

If you’re unsure of what types of trade insurance you need, we highly recommend speaking with one of our experts.

All of our account managers are qualified insurance brokers and can look at the full needs of your business.  They will be able to put together recommendations for you and talk them through with you.

For more information please get in touch with your account manager or call our office on 1800 808 800.

Other types of Trade Insurance.

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