Tradie tools, tradie insurance

Tradies: don’t fall victim to the underinsurance trap

Setting up for a new year in business as a tradesperson can be a huge task, whether you’re an established business owner or new to the game. Add the fact that 2021 is already no ordinary year and your to-do checklist is bound to be longer than your arm, with making sure your insurance is in order probably being quite low down. But with so much risk involved with being a tradie, whether you’re a brick layer, plumber, builder, electrician or mechanic, making sure that you have adequate cover in place can be crucial.

Types of tradie insurance

While each trade’s specific insurance needs are different, and there are some state-specific requirements, there are some general types of insurance tradespeople should consider. They broadly fall into three categories:

  • Protecting your business – like public liability, professional indemnity, domestic building and builder’s indemnity insurances
  • Protecting your assets – like tool insurance, or for portable equipment (for example, if you take your iPad or laptop on site), and
  • Protecting your people – like workers’ compensation (if you employ others) and income protection (which helps to protect your income if you’re physically unable to work for a period of time).

While this might seem like a lot, seeking expert advice and guidance can help to simplify the process and give you confidence that you’ve got the right types of cover for your needs.

Risk of underinsurance for tradies

Basic insurance alone sometimes isn’t enough. Tradies should make sure they have enough insurance to cover them if something unexpected should happen. Underinsurance is when you do not have adequate insurance to cover the cost of damage or loss to property or possessions.

It might seem ideal to go for the cheaper insurance option if your purse strings are a little tight but being underinsured can lead to huge personal costs. If you’re underinsured and have to make a claim, you won’t receive the full cost for the damage incurred, whether it be to your machinery, tools or property. The settlement you’ll receive for a claim on underinsured assets will be in line with the actual sum insured. You will then have to cover the rest of the cost out of your own pocket.

How to avoid underinsurance

As a tradie, your business is your livelihood and should be protected at all costs. There are a few steps you can take to ensure you don’t fall victim to the underinsurance trap:

  • Value your assets accurately: Ensure your insurance cover represents the true value of your assets, including buildings, tools and machinery. Don’t try to reduce your premium by only insuring a fraction of the replacement value, otherwise you could find yourself in hot water if the unexpected happens.
  • Keep up-to-date: Insurance should be a fluid process. So, review your assets after every new purchase to ensure your insurance is up to date. If you make any improvements to your business, for example by buying tools or equipment making use of the instant asset write off allowances, you should notify your broker or insurer to ensure that the sum insured is still relevant.
  • Discuss with your broker: In order to accurately value your business and insurance needs, you’ll need to consider a variety of factors to ensure you’re not left underinsured. At Allsure Insurance, we specialise in this area. Make sure you utilise our knowledge, experience and expertise by discussing your options with us.

We can find the right insurance cover for you

At Allsure Insurance, we’ve seen first-hand how underinsurance can be disastrous for tradies. We believe that having the right insurance is no accident – and insuring yourself from an unforeseen event or lawsuit at work is one of the most important cost-saving measures a tradie can take. We can help to make sure you’ve got the best solution available to you in place, and help you calculate the value of your assets to ensure that you aren’t underinsured should the unthinkable happen. Contact us today to find out more.

If you’re yet to renew your insurance, check out our article to make sure you’re prepared for the year ahead.

General advice warning

The information above may be regarded as general advice. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information.

Accordingly, you should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation and needs before acting on it. Where the information relates to a particular financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product.