Whether we like it or not, most tradesmen will require one form of insurance or another.

Some tradesmen simply take out insurance because they have to, whilst others take out cover because they understand the benefits and don’t want to take the risk of having no insurance.

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In this guide we will take a look at both the mandatory and the optional insurance covers for tradesmen, and will try to help you in understanding what they cover and why you might need them.

Mandatory Insurance for Tradesmen

There are two types of insurance that will be mandatory for many tradesmen. These are public liability insurance and income protection insurance.

Public Liability Insurance

This is the insurance that most tradesmen will need to enter a worksite.

Public liability insurance covers you for any property damage or personal injury that you cause to other people. If someone tries to sue you for financial damages, the settlement will be covered by your insurance company rather than coming out of your own pocket.

Public liability is available in amounts of $5, $10 and $20 million. The amount you require will depend on your own needs and objectives. Many tradesmen find that $5 million is sufficient, however contracts involving large commercial premises such as shopping centres will often stipulate a higher level of cover.

The premiums for public liability insurance vary depending on the size and type of business that you operate. A sole trader working as a carpenter may find cover for around $40 a month, however a large firm with plenty of staff and high turnover will generally pay a lot more, especially if they undertake high risk work.

Public liability insurance is often required to get onto large worksites, but for some tradesmen it will also be mandatory to have cover in place in order to obtain your licence. A good example is electricians in Queensland who require a special form of liability cover in order to obtain a licence.

Although public liability is mandatory for many tradesmen, it also makes great financial sense to have this cover in place. Given the affordable premiums and the large amount of cover offered, having public liability insurance should be an easy decision for any tradesman.

Income Protection Insurance

Income protection is not as commonly required as public liability, however it could be argued that the cover is even more important for a subcontractor or self-employed tradesman.

Income protection insurance is designed to replace the majority of your income if you cannot work for a period of time due to illness or injury.

There are a number of options that will affect your income protection, including the waiting period, benefit period and benefit amount. For more information on these options you should visit our page on income protection insurance.

Another type of cover that can be substituted for income protection is accident and illness insurance. This type of cover is generally cheaper than proper income protection, however it is also considered to be an inferior form of cover in most cases.

If you are simply seeking cover to get onto the worksite an accident and illness policy, may be sufficient, however if you are seeking a comprehensive level of cover then income protection insurance should be considered.

Optional Insurance for Tradesmen

In addition to public liability and income protection there are a number of other forms of insurance that many tradesmen choose to take out. These include tool insurance, TPD insurance, life insurance and trauma insurance.

Tool Insurance

The most popular form of optional cover for tradesmen is tool insurance. Tool insurance can cover your tools against theft, accidental damage, fire and storm damage.

The coverage offered by tool insurance can vary dramatically from one insurer to the next. Theft for example will be covered by some insurers only when there has been forced entry. Other insurers will cover all forms of theft, whilst some insurers only cover theft as an optional extra.

When comparing tool insurance policies it is important to look at the specific cover offered rather than concentrating solely on the premiums.

TPD Insurance

TPD stands for total and permanent disability. This is a popular form of insurance for tradesmen due to the physical nature of the work you undertake.

A TPD insurance policy pays a lump sum if you suffer an injury or illness that leaves you unlikely to be able to do your job ever again. The funds can be used to reduce debt and cover medical and rehabilitation costs.

Life Insurance

Life insurance is important for all tradesmen, but especially for those with a wife and children to support. The life insurance policy will pay a lump sum to your family in the event of your death, regardless of whether or not the death was as a result of your work.

Life insurance can be added into your income protection policy, and depending on the amount of cover required you will generally find that the premiums do not increase by a huge amount.

Trauma insurance

Trauma insurance is less common among tradesmen, but it is growing in popularity. The cover will provide you with a lump sum if you are diagnosed with a critical illness or condition such as cancer, heart attack or stroke, along with dozens of other serious conditions.

Which Ones Should You Have?

In a perfect world we would all have each type of insurance, but of course this is not affordable for everyone, and we don’t want to spend every spare cent on insurance!

Most tradesmen will be happy with public liability and income protection insurance, but it is certainly worth considering the other forms of insurance.

Tool insurance is generally very cheap, and with the chances of your tools being stolen quite high, it is definitely a policy worth considering.

Life, TPD and trauma insurance can all be bundled in with your income protection insurance, and it is worth including some level of cover especially if you have a family that depends on your financially.

The best option is to speak with an insurance expert who knows the trades and construction industry and can tailor an insurance package for you that matches your needs as well as your budget.

Here at Tradesman Insurance we have a network of insurance experts who are ready to assist. We don’t believe in the hard-sell approach of some other insurance companies, and will happily provide just the quotes and information that you want.

For more information please contact us, or if you are ready to find out how affordable your insurance could be simply complete our online quote request.


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