When it comes to business insurance for tradies, there’s no policy more popular than public liability insurance.
Most self-employed tradies have it, and for many it’s a mandatory requirement for their licence or the contracts they’re working on.
It is a fairly straightforward form of insurance, but there are still a few traps that are easy to fall into.
In this guide we’ll look at the top five mistakes we come across when it comes to public liability insurance for tradies.
Taking a spare ten minutes to read through this could save you a whole lot more time (and money!) down the track.
1. Not telling the insurer everything
It’s so easy to buy public liability insurance now, which is a good thing, but it can sometimes be dangerous.
If you simply tell the insurance company or broker your trade, then answer “no” to a bunch of questions about hazardous work and locations, you can have yourself a policy very quickly.
But have you really told the insurer everything they should know? Your duty of disclosure means that it is your responsibility to tell the insurer or your broker anything that could affect your risk.
So you might have told them you’re an electrician, which is fine, but did you tell them that you’re actually working on artificial intelligence robotics in a large manufacturing plant?
That’s the type of thing that your insurer really needs to know, as it’s not what they’d expect a typical electrician to be doing.
It doesn’t mean they wouldn’t still be able to insure you, but they might need to charge a higher premium to reflect the higher risk.
What if you just didn’t tell them? Well if you had to make a claim, the insurer could potentially deny the claim on the basis that you didn’t disclose important information about your business.
So if you’re doing anything at all that seems a little outside the norm for your trade or occupation, the safest option is to ask us if those activities would be covered under the standard policy, or if we need to find a more specialised cover for you.
There’s no point having public liability insurance if it’s not the right policy for your business.
2. Not updating at renewal time
Even if you tell your insurer everything when taking out your public liability insurance, you still need to keep your information up to date.
Things change in business all the time. You might take on new staff, bigger contracts, different types of work, different work locations, higher value contracts. The list goes on.
Your policy might have been perfectly appropriate at the time you took it out, but it might not be appropriate as your business changes and evolves.
That’s why it’s important to keep your insurer or broker up to date when things change. Renewal time is a great trigger, but really, you need to keep us updated as soon as things change.
Imagine lodging a big claim, and having the insurer deny the claim because you didn’t tell us that you’d started working in power stations? It would be a disaster.
Public liability insurance is not set and forget. When things change in your business, it’s imperative that you contact us and let us know. Then we can let you know if your current policy is still appropriate, or if we need to make some adjustments.
3. Choosing on price alone
We all want to save money. Whether it’s insurance or any other business expense, we don’t want to pay more than we have to.
But it’s important not to go too cheap. How many tradies drive around in a Great Wall ute full of Ozito tools? Not many, if any.
No disrespect to those brands, but they are built to a certain price point and aimed at a certain market. Sure they’ll do the same basic job, but we all know they’re not the same.
Tradies insurance can be viewed in a very similar way. There are some incredibly cheap policies out there, and they will do the same basic job, but they are definitely not the same.
The only time you’ll probably get to see the difference between a high quality policy and broker, and lower quality policy and broker, is at claim time.
Many tradies have never had to claim so it might be a little difficult for them to judge, but ask a business owner who has had to claim on public liability insurance and they will know!
So by all means compare premiums and don’t pay too much, but consider the quality of the policy and the reputation of the broker before you commit.
4. Not understanding the cover
This isn’t necessarily a mistake, but we do find that a lot of tradies don’t fully understand what public liability insurance actually is.
They know that they need it, and most know that basically it’s going to cover them if they cause property damage or personal injury to a third party.
But there is more to it than that, and the more you know about the cover, the better placed you are to make decisions about your insurance.
Importantly, there could be things that you didn’t even realise your public liability insurance covered, and therefore could be missing out by not claiming for such events.
Your insurance broker is the best person to ask if you want to know anything about the cover. They can tell you what is and isn’t covered, and whether or not your policy is right for your business.
5. Not having any!
This is the biggest mistake of all! Put simply, if you’re a self-employed tradie (including subcontractors) and you don’t have public liability, you are taking a massive risk.
If you run your own business or work as a subcontractor, and your work activities result in serious injury to another person, you could be up for hundreds of thousands, if not millions of dollars.
You might think it’ll never happen to you, but it does happen to tradies. Sometimes the amount is so small it’s not even worth claiming, but we have had claims run into six figures.
How would you cope if you had to pay a $100,000+ claim out of your own pocket? It would be enough to send plenty of tradies bankrupt.
But with public liability insurance, not only is the claim amount covered, but all of your legal expenses may be covered as well.
Of course this is limited by the amount of cover you have, but with a minimum cover of $5 million and a maximum of $20 million, that is some pretty serious coverage.
Considering a $5 million policy starts at around $400 a year for a typical one-person trade business, it makes no sense to run a business without it.
To see how inexpensive a policy could be for your business, click here for an instant online quote.
More information
As your insurance broker, it’s our job at Trade Risk to answer any questions you have regarding public liability and other forms of business insurance.
We’ve assisted over 7,000 tradies with their public liability insurance needs, and there’s not much that our team hasn’t seen when it comes to this form of cover.
Whatever questions you have, no matter how basic or complex they may seem, our team are more than happy to talk them through with you.
Call us on 1800 808 800 or contact us online and we’ll be happy to help.
