The whole reason that you have insurance is so that you can make a claim if something goes wrong.

Therefore, if something happened that should be covered by your trades insurance, you’d be mad not to make a claim right?

The answer isn’t as crystal clear as it might seem…

There are two reason for this:

  • Policy excesses
  • The impact on future insurance

In this guide we’ll look at both issues.

Policy excesses

All public liability and tool insurance policies will have an excess which applies to claims.

What is an excess?  It’s simply the amount you need to contribute to a claim.  It is exactly the same with your home and car insurance policies.

The reason the excess exists is to discourage large numbers of small claims, which in turn helps to keep insurance premiums low.

Stolen Tools

Now let’s look at in in practice.

Let’s say you have a tool insurance policy with a $250 excess (which is typical for our tradie clients) and you have a $200 tool stolen.

Why would you claim for something that costs $200 to replace, when it’s going to cost you a $250 excess?

Okay so that one is worthy of Captain Obvious, but what if the stolen tools where worth $300?

You might think paying a $250 excess to replace a $300 tool is worthwhile, as you’ve just saved $50 on replacing your stolen gear.

It’s not quite so straightforward however, which leads us into the next section which covers the impact of making a claim on your future insurability.

Impact on future insurance

One of the questions asked by any insurance company is what claims you’ve had in the last couple of years.

If you’ve had a lot of claims, the insurer might decide that you’re a higher risk and should pay a higher premium, or they might decide they don’t want to offer you cover at all.

It can be a similar story at renewal time.  If your insurance company decides you’ve become too much of a risk, they may bump up your premiums or even refuse to offer you a renewal.

Before we go any further, we need to state that we would never, ever, discourage a client from lodging a claim for something they are covered for.

However, before you lodge that claim you need to think about the consequences down the track.

Let’s say you have a claim for $5,000 worth of stolen tools, or perhaps $5,000 worth of damage you have caused to a client’s property.

This is a no-brainer.  Of course you would lodge a claim and save yourself from being five grand out of pocket, or $4,750 after a $250 excess.

But what if the amount was $300 as per the earlier example?  Is claiming fifty bucks ($300 claim less your $250 excess) really worth it?

No insurance company is going to knock you back because you had one tiny claim, but if you have another one or two of those small claims over the following year or two, it could start to impact upon you.

Those two or three claims that totalled $500 might end up costing you more than that in the long run with increased premiums.

Think about your claims profile

The last thing we want to do is scare people into not making a claim!  The whole reason we provide insurance to tradies is so that they can be looked after when needing to make a claim.

Stolen Tradies Ute

What we are saying is that you should think about your claims profile.

If you’ve already made two claims during the year and now have another small claim, it may be better to cop the small claim knowing that it will help you at your next renewal.

On the other hand if you haven’t had a claim for a while and now have a small one to make, you can probably feel quite safe in getting a few dollars back from your insurance company.

No matter what happens, it is always a good idea to notify your insurance broker of any potential claim.

In fact when it comes to public liability and professional indemnity, it is vital that you advise your broker as soon as possible regardless of whether or not you’re going to lodge a claim.

Here at Trade Risk we have made it easy for tradies to claim on their insurance.  Our new online system allows clients to lodge a tool insurance claim online, even from your mobile.

Public liability is a little more involved, so we recommend that you contact us via phone or email if an incident has occurred which may be covered by your liability policy.

For more information and advice about claims please contact us for a chat.