The pressure that tradies are under can be quite excessive at times. This is especially true if you are the individual who has the final word on matters within your business. Keeping track of the hundreds of details that are part of your day to day life is hard and letting somethings slip through a crack is easy.
Unfortunately, even honest mistakes can be excessively costly for tradies. Nowhere is this more apparent than with public liability insurance.
The proper cover is absolutely essential for any tradie. Working with an array of machinery, labourer’s, and tools in an uncontrolled environment can spell disaster if even the smallest mishap occurs.
Since knowledge is power, here are four of the top mistakes tradies make when it comes to public liability insurance.
1. NOT UNDERSTANDING WHAT PUBLIC LIABILITY INSURANCE COVERS
With so many different varieties of insurance that tradies need to maintain sufficient cover for themselves and their businesses, it is easy to misunderstand the particulars of each kind of insurance.
Public liability insurance will cover you in the event that personal injury or damage to property happens because of something you or your employees or subcontractors do.
IS PUBLIC LIABILITY THE SAME AS WORKERS COMP INSURANCE?
There is a common misconception that public liability insurance is the same as workers compensation insurance. Both types of insurance are necessary if you have employees. However, public liability and workers compensation insurance cover different circumstances.
- Public liability insurance protects you from negligence on your part or the part of your employees. If damage occurs to a person or their property that is outside of your business, this insurance will provide cover and protect you from lawsuits, personal responsibility for costs and potentially bankruptcy.
- Workers compensation insurance provides cover for your employees in the event of a work-related injury. It does not protect you from suits brought by those outside of your business.
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2. BELIEVING PUBLIC LIABILITY INSURANCE IS UNAFFORDABLE
Because public liability insurance is often required, many tradies think insurers will take part in inflating prices of the policies. Fortunately, the Australian government has measures in place to protect tradies and others who need this type of insurance from price gouging.
Public liability insurance is so essential for protecting personal and business assets that tradies cannot afford to take the risks of working without it.
WHAT INFLUENCES THE COST OF PUBLIC LIABILITY INSURANCE?
The insurance rates, cover, and terms of individual policies will differ for the many kinds of trades and various circumstances. Here are the top influencers of the costs of public liability insurance:
- Level of risks (either high-risk locations or high-risk activities)
- Your occupation
- Whether or not you work with subcontractors
- Business’s size
- The amount of coverage on your policy
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3. OMITTING IMPORTANT DETAILS WHEN APPLYING FOR PUBLIC LIABILITY INSURANCE
Because there are so many factors that influence the price of your public liability insurance as well as your optimal level of cover, it is imperative for you to share all information regarding your business with your insurance broker when drawing up your policy.
WHAT CAN HAPPEN IF DETAILS ARE LEFT OUT?
A complete look at your job and surrounding circumstances set you up for a solid policy with appropriate cover. Leaving out details can have consequences including:
- Insufficient cover- If your policy covers up to five-million dollars in damages and you routinely work in areas with considerably higher priced surroundings, you could come up short if you need to file a claim.
- Denial of a claim- Some insurance companies reserve the right to deny claims if they see discrepancies between the information you provided and the circumstances surrounding the claim. For example, if a subcontractor damages property on a job site, but you failed to tell the insurance company you work with subcontractors, you may face denial of your claim.
HOW CAN I BE SURE ALL MY INFORMATION IS CORRECT OVER TIME?
If you shared all of the important information when applying, you might think that your public liability insurance cover is good for the long haul. Unfortunately, this is often not the case. Here are some circumstances you should share with your insurance broker. Staying up to date with changes is essential to be sure you have proper coverage.
- A change in the number of employees- This should include employees added as well as having fewer workers because your rates may adjust up or down given the situation.
- Working with subcontractors- Some policy amendments may be needed if you are working with subbies.
- Changes in typical job locations- If you have normally worked in private homes and public buildings and now work in the mines, the cost and amount of your cover will certainly modify accordingly.
WHEN SHOULD I SHARE CHANGES IN MY BUSINESS WITH MY BROKER?
Ideally, you should update your public liability insurance policy as soon as you experience a major change in your business circumstances. This is a good way to be sure you will find no nasty surprises if you need to file a claim. However, should you forget to update your information right away, renewal time for your policy is a good time to make changes.
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4. HAVING NO PUBLIC LIABILITY INSURANCE
A tradie without public liability insurance can easily find themselves in a financially devastating situation. Even though you may tell yourself that you have any number of ‘good’ reasons to not have public liability cover, the bottom line is you need to protect yourself, your employees, and your business.
COMMON REASONS TRADIES DO NOT GET PUBLIC LIABILITY INSURANCE
- It is too expensive- There are numerous amounts of cover available at various price points. Talk to an insurance broker and lay your cards on the table. Chances are your broker will help you find the cover you need at a price you can afford.
- My employees and I are very careful- There is no doubt that as a businessperson, you watch over your employees and yourself. However, things happen that are outside of your control. Equipment breaks, machines malfunction, or a great employee has a bad day. You should not gamble your future on something so variable.
- I do not have time- Most insurance brokers are flexible and are more than willing to arrange a meeting on your schedule.
You would not take unnecessary risks with your employees or your equipment. Why would you take a chance on not having the right public liability cover?