Insurance premiums are the recurring payments (insurance policy payment) tradies make to maintain their insurance coverage, protecting against potential financial setbacks caused by accidents, injuries, or property damage. One question frequently arises: Can tradie insurance premiums be managed or controlled?
The answer is yes but with certain conditions. A range of factors influences insurance premiums, some within your control and others not. For instance, maintaining a strong safety record and choosing appropriate coverage levels can positively impact costs, while external factors like industry risks and economic changes may drive premiums higher despite your best efforts.
In this blog, we will explore five key reasons why insurance premiums increase for tradies. More importantly, we’ll provide actionable tips to help you control these costs.
1. Coverage Choices
One of the primary factors that can lead to increased insurance premiums for tradies is the coverage choices made when setting up or renewing a policy. Opting for higher coverage limits or adding supplementary coverages—such as income protection, tools insurance, or public liability insurance—will naturally result in higher premiums.
For example, a tradie who adds coverage for expensive machinery or tools against theft and accidental damage will pay more than someone who limits their policy to basic liability insurance. While these additional coverages provide enhanced protection, they can significantly inflate the overall cost of the premium.
Managing Choices
To manage premium costs effectively, tradies should periodically review their insurance policies to ensure they are not over-insured. You can evaluate yourself or seek expert advice for specific risks and identify which coverages are essential for your work. Avoid paying for coverage that offers minimal value or protection for unlikely scenarios.
2. Work Practices and Safety Standards
Unsafe work practices or non-compliance with industry safety standards can significantly impact premium for insurance for tradies. Insurance companies closely evaluate the risk level associated with a tradie’s work, including how they conduct their tasks and adhere to safety protocols. A history of accidents or claims often signals a lack of proper safety measures, which makes an individual or business a higher liability.
For example, a tradie working at heights without adequate fall protection equipment or skipping safety inspections may be flagged as high-risk by an insurer. Such practices not only increase the likelihood of accidents but also result in high insurance premiums.
Managing Work Practices and Safety Standards
Tradies can keep premiums in check by prioritising safety in every aspect of their work.
- Follow all relevant industry regulations and safety guidelines to demonstrate a commitment to safe practices.
- Stay updated on best practices through regular training sessions, ensuring all workers are equipped with the knowledge to minimise hazards.
- Invest in high-quality safety gear and ensure it is used correctly and consistently on every job.
If your premiums are going up, contact Tradies365 today for a free consultation.
3. Insurance Gaps
An insurance gap occurs when there is a lapse or inadequacy in coverage, leaving certain risks unprotected. For tradies, this can happen if the coverage limits are too low (to pay a minimum premium), or if the policy fails to account for new risks due to changes in work scope or assets.
When a tradie identifies an insurance gap and seeks to update its coverage, insurers may view the lapse or inadequate coverage as a red flag. This signals a potential lack of proactive risk management, making the tradie appear riskier to insure. Additionally, expanding coverage to fill the gap—whether by increasing limits or adding previously missing protections—naturally results in higher premiums.
For example, a tradie who upgrades their tools but doesn’t immediately update their tools insurance might face uncovered losses in the event of theft or damage. Once the policy is adjusted to include the new equipment, the premium for insurance will increase to reflect the higher value being insured.
How to Manage Insurance Gaps
To avoid premium hikes due to insurance gaps, tradies should:
- Schedule annual or semi-annual reviews of your insurance policies to ensure they reflect your current needs.
- Whenever there are changes in your business, such as new equipment, expanded services, or additional workers, update your insurance immediately.
- Avoid allowing policies to lapse, as this can trigger higher premiums when reinstated.
Click here to read about how to reduce premium costs for handyman business insurance
4. Delayed Premium Payments
Delayed or missed premium payments can be another significant reason for increased insurance premiums. Insurers rely on regular payments to maintain policies and assess the financial reliability of their clients. When payments are late, it signals potential financial instability or a lack of responsibility, which insurers may interpret as an increased risk of claims going unpaid. This perception can lead to higher premiums or stricter payment terms in the future.
To avoid premium increases due to delayed payments, tradies should adopt proactive financial management practices:
- Set Payment Reminders: Use digital tools or apps to schedule alerts ahead of due dates.
- Automate Payments: Where possible, set up automatic deductions from your account to ensure timely payments without manual intervention.
- Maintain a Financial Schedule: Keep your financial records organised, and allocate funds specifically for insurance to avoid cash flow issues.
5. Poor Claim Management
Inefficient claim management can lead to higher insurance premiums for tradies. Frequent claims, improperly documented claims, or inflated claims can signal poor management practices, leading insurers to view the tradie as high risk. This perception often results in increased premiums or stricter policy terms.
For example, if a tradie files multiple small claims without a clear necessity, insurers might adjust future premiums to account for the increased cost of administration and payouts.
How to Manage Claim Processes Effectively
- File Claims Judiciously: Only file claims for significant incidents, as frequent minor claims can raise red flags with insurers.
- Keep Detailed Records: Maintain organised documentation, including photos, receipts, and reports, to streamline the claims process.
- Seek Expert Assistance: Work with insurance providers like Tradies365, who offer dedicated claims support, ensuring the process is efficient and hassle-free.
Protect your trade, and secure your future!
At Tradies365, we specialise in providing tailored insurance solutions for Australian tradesmen. From comprehensive coverage to proactive risk management and hassle-free claims assistance, we’ve got you covered every step of the way.
Don’t leave your livelihood to chance. Contact us today to get a FREE quote and experience insurance that works as hard as you do.
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Note: The material offered here is for informational purposes only. It does not constitute legally binding advice and should not be a substitute for a consultation with an insurance expert.