Deciding on insurance for yourself and your business can feel like a walk through the tool aisle at Bunnings. It’s row after row of different insurance covers with shelves upon shelves of various policy information. As brokers, there’s nothing that irks us more than seeing tradies and builders being under (or over!) insured from the false perception that a general insurance cover will fit everyone within the industry. That’s not the case!
If you’re a builder, you may be thinking that the mandatory insurance you hold will suffice and that there is no need for additional covers. Truth is, what that insurance offers may not be enough in the event of accidental damage to your materials, or if a client were to make a claim against you.
So, how do you decide what insurance you need when there are hundreds of options available? We’ve listed down the main cover options that are specific to builders and tradies, their purpose, and what to consider before taking out a policy.
This insurance offers the most comprehensive coverage for anyone in the construction industry. Contract Works provides protection for specific or multiple projects occurring at the same time, covering the interests of all parties involved.
Contract Works Insurance has two main components – cover for third party liability claims made against you or your business, and cover for damage to physical property and materials. This cover also provides standard inclusions such as debris removal and professional fees to help alleviate financial pressure off you if you need to make a claim.
We’ll now take you through the different types of covers usually provided by Contract Works Insurance:
While it’s important to implement safety practices throughout the course of your project, you cannot entirely rule out the possibility of an accident or injury happening to you, your employee, or a third party member, whether it’s on the job or many years after completion.
This cover provides for claims made against you or your business for the injury, death, damage, or loss to a third party or their property during the course of your build. If any of these events were to happen, having a public liability cover will not only provide for defence costs incurred in defending or investigating a third party claim, but also ease the financial pressure to your business if a hefty settlement is required.
This section can provide cover for contract works (material damage to works/projects being carried out), plant and equipment, existing buildings or structures, off-site storage and items in transit. If sublimits are selected on the policy, a number of additional costs and expenses can also be insured to pay out in the event of a claim being lodged under insured property.
Chances are you don’t stash your building materials in a steel safe when you’re not on-site. And because we don’t live in a perfect world, you are at risk of losing them to thieves who know exactly the value of your materials. If it’s not that, then it may even be the unpredictable weather and its damaging effects.
Contract Works Insurance provides cover for the cost of replacing your building materials in the event they are stolen or destroyed through theft, natural occurrences, or other insured events.
Tools of Trade
Let’s not forget your very important partner in crime: your tools. There is unique insurance especially for this, but it does not necessarily come with Contract Works Insurance. Tools of Trade is available as an optional add-on to Contract Works or bought as a standalone policy with different amount of coverage.
Your work might not be building an entire house, but if you’re a plumber, electrician or bricklayer, your work is just as important in ensuring the house is in livable condition. You may be thinking that you don’t need such comprehensive coverage like Contract Works Insurance, but you do still require insurance to protect against claims of injury to a third party, or their property, during the course of your work.
An incident like a small plumbing leak could lead to very costly water damages where you may be held liable. To give you an idea of how much we’re talking, a report by Insurance Business shows a 72% increase of property related claims due to water damage. The average claims have skyrocketed from $17,627 in 2014 to $30,361 in 2018. Talk about a jump! And if you’re a sole trader, a claim of this size could put you out of business (we don’t want to scare you, but it has happened).
Enter the Trades Insurance Pack – it is designed for tradies looking for liability cover and protection for their tools, without paying for the full range offered under Contract Works Insurance. It would be worth reviewing your insurance to ensure you’re appropriately covered. Our brokers are happy to help you with this!
3. Home Warranty Insurance
This insurance provides cover for the homeowners, although it is taken out by you as the builder. This policy is mandatory in most states and is designed to ensure that the homeowners are not left with an incomplete build should something happen to you or your business mid-project such as an unexpected death, disappearance, or insolvency. The period of the warranty is usually six years after the completion of a project (5 years in South Australia and only 7 months in Queensland).
4. Workers Compensation Insurance
Don’t forget another one of your most important assets – your employees. Each time they set out on a job, they put their safety on the line, so it is your duty and responsibility to take precautionary measures to promote a safe work environment. It is a legal requirement for all employers to take out Workers Compensation Insurance. If an employee becomes injured while at work, the financial cost to you could have a significant impact on your business and if not properly covered, could even put you out of business.
5. Income Protection
There’s nothing like being your own boss. On the flip side though, there are many uncertainties that can happen quite suddenly, affecting your lifestyle. An irregular income stream is something that most business owners cannot afford to have. Without a monthly salary, it would be difficult to maintain your lifestyle while also keeping business going. Income Protection Insurance gives you that security of a steady monthly income if you become unable to work due to injury or sickness. You could also have lump sum payments made to you or a nominated representative in the event you are permanently disabled, or if you pass away.
6. How much cover do you need?
Now that you get the gist of what insurance covers there are for professionals in construction, you’re probably wondering how much cover you need and where do you go from here? There are several factors that will affect your decision. You will need to consider the total value of your contracts, the number of staff you have employed, and the value of your tools.
This is where we step in! East West Insurance Brokers are specialists in construction insurance, and we know everything there is to know about what builders and tradies need to ensure you’re protected when out in the field. We work with you directly and we’ll make sure you get the cover that’s tailored to the specific needs of your line of work.
If you’re unsure about what you need right now, that is no problem for us. We’re happy to talk to you to better understand what you do and provide solutions just for your business. Contact a team member today using the details below:
1800 809 132
email@example.com | www.ewib.com.au
Important Note: All insurance policies have exclusions. Please refer to the Product Disclosure Statement or Policy Wording to decide whether an insurance policy meets your needs.