Tradies are extremely knowledgeable when it comes to the services they provide. Whether you’re an electrician, plumber, painter, carpenter or specialise in other skilled labour, your customers know who to call when they need their job done right. You’re the expert after all!
But while you may be a master of your trade, you might not be an expert on every aspect of your small business… yet. Business insurance is one area where small business owners of all kinds can easily get confused or make a misstep. For tradies, an insurance mistake can cause major headaches and negatively impact your ability to work.
Here are five of the most common mistakes that tradies make when it comes to business insurance.
1. Not fully disclosing information
Buying Public Liability and other forms of business insurance is a lot easier than it used to be thanks to the internet. That also means that it’s a lot easier to miss a tick box or fail to disclose important information to the insurer. However, you must check that you have told the insurer everything they need to know to make sure the policy will fully protect your business.
The onus is on you to disclose relevant information to the insurer, particularly factors that might increase risks. For example, you tell an insurer that your trade is plumbing, but neglect to tell them that one of your principal contracts is working on steam pipes in a power station. This isn’t something your insurer would categorise as standard plumbing trade, and it may command a larger premium because it’s more risky.
If you don’t tell your insurer about work that you’re doing that’s out of the ordinary, you are at risk of having claims relating to that activity declined. If you accept a contract to work on something beyond your normal business, it’s best to check with your insurance provider that you are covered.
2. Not updating when you renew
You may have carefully detailed your work activities to your insurer when you took out your Public Liability insurance and other policies, but it’s your responsibility to make sure that this information remains current. Changes made to your business since buying your policies could affect your cover.
Although your policy may have been exactly right for your business when you signed up to it, it might not suit you as well now. Employing extra staff, winning larger contracts, taking on new forms of work, or even offering services in a new neighbourhood can all trigger changes to your insurance cover. Ideally you should let your insurance provider know as soon as anything changes, but definitely at renewal time. If you signed up on the understanding, for example, that you only work on domestic premises, a big contract to work in a factory could mean that any claim associated with the factory work could be turned down.
3. Only looking at the bottom line
Part of doing business is trying to get the best deal and save as much money as possible. It may be tempting to go for the cheapest insurance that you’re offered, especially if you’re trying to stretch your budget. However, stop and think for a minute. How many other parts of your business do you apply that to? Do you buy the cheapest power tools, the lowest priced work boots, the cheapest vehicle? Or do you go for quality because you know that suits your work better?
Price isn’t the only factor to consider when choosing business insurance for tradies. There are many insurers who offer the cheapest prices on the market, but the cover they offer might not suit your business needs. You may need cover for specific types of work or situations that don’t come with the lowest priced options. Before buying a policy, carefully read the fine print and consider if it will provide the right type and amount of cover for your small business.
4. Not knowing what cover you have
Many tradies don’t want to be bothered with insurance paperwork. It’s easy to buy Public Liability and other tradie insurances, pay the premium and forget about it. However, this might not be the best way to protect your business. It’s important to understand your cover.
It’s worth taking the time to read through your policy and to ask your insurance provider any questions you may have. That way you can rest assured that you have all the cover you need, but also make sure that you don’t miss out on future claims. If you don’t know what cover you have, you might miss making claims for some events because you don’t realise that your insurance extends to them.
5. Not having any cover
Of all the insurance mistakes that tradies make, this might be the worst one. If you work as a self-employed tradie (including if you are subcontracted by someone else) and don’t get Public Liability insurance, you could be facing increased risks. You are found liable and are without insurance, you could be out of pocket for hundreds of thousands or even millions of dollars in damages.
It’s tempting to think that this won’t happen to you because you are good at your job. However, accidents can happen to the most skilled and careful tradies. Sometimes the consequences might be minor and you might be able to settle out of your own pocket, but serious injury or property damage could be enormously costly. Legal expenses and settlements can add up fast. Do you have $100,000 or more in your bank account to settle claims against you? Probably not!
Having the right tradie insurance to protect your small business is a small price to pay for security and peace of mind. BizCover helps tradies get their insurance sorted quickly, so you can get back to work.