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As a tradesperson, accidental personal injury or property damage will likely occur during the course of your working life. That’s not because of a lack of skill, care or attention to detail, but because of the risks associated with being an electrician, plumber or builder.
Tradesman insurance can help protect your business if something does go wrong, covering compensation costs and legal fees when you need to make a claim.
However, tradesman insurance isn’t a specific type of insurance, but rather a collection of policies best suited to protect those in the industry. A good tradesman insurance arrangement will typically include public liability insurance, professional indemnity insurance, tools and equipment insurance and, when applicable, employers’ liability insurance.
What is tradesman insurance?
Considering the risks associated with the sector, tradesman insurance is a crucial consideration for plumbers, builders, electricians, and anyone else in a trade profession.
In most cases, public liability insurance will form the heart of your policy. But this will be complemented by a range of additional covers intended to protect your property, stock, and even the buildings where you carry out your work.
Tradesman public liability insurance is designed for situations where, as a result of your work, a client, visitor or member of the public is injured, or has their property damaged.
Additionally, because, as a tradesperson, you sell your expertise to other people, professional indemnity insurance can be useful as it protects you in circumstances where your professional opinion results in financial loss or damages for your client.
Comprehensive tradesman insurance policies may also include buildings cover, to protect companies which have their own physical premises, as well as business contents insurance for any equipment lost, stolen, or damaged in the office. Additional coverage is available for the cost of replacing tools that you take on the road or leave in a vehicle overnight.
Contract coverage can be an essential part of tradesman insurance, depending on how your business works. The conditions of a contract may leave tradespeople responsible for protecting the materials and works on a site, and contract coverage can help with this.
Other types of business insurance for tradesmen
Other forms of protection sometimes added to tradesman insurance include stock coverage, ‘own plant’ loss, and ‘hired in plant’ equipment.
Another important consideration as a tradesperson is personal accident cover. You are just at risk as your employees, clients and members of the public, and personal accident insurance can help with lost income and business costs if you were to sustain a serious injury or were permanently disabled. And you don’t have to be at work at the time of the accident for the policy to pay out. It can also provide a lump sum payment in the event of accidental death.
Choosing the right policy will be a process of considering the activities of your business, and what level of coverage you need as a result.
» MORE: Compare business insurance
What does tradesman insurance cover?
While you might apply for ‘tradesman insurance’, that term actually encompasses several different policies applicable to your business. Each will cover the legal fees and, where applicable, compensation costs related to a claim.
Below, you can look at which types of business insurance are typically included with tradesman insurance, and which ones you may need to source separately.
What is usually included in tradesman insurance?
While tradesman insurance quotes will vary from insurer to insurer, they usually include a combination of the following:
- employers’ liability insurance (if needed)
- public liability insurance
- professional indemnity insurance
- stock and materials insurance
- plant, tools and equipment insurance
- contract works insurance
- personal accident insurance
- business contents insurance
- tradesman van insurance
It is important to carefully read what your potential tradesman insurance policy will offer because the automatic cover from each insurer will differ.
What is usually not included in tradesman insurance?
What isn’t covered by your tradesman insurance policy will largely be dictated by what you choose to include at the point of purchase.
So, if you buy a tradesman insurance policy without stocks and materials insurance, that specific policy wouldn’t cover you if your stock was stolen, or if materials were damaged.
This is why it is so important to consider the particular needs of your industry and business and to check exactly what the policy you are buying covers.
There are certain common situations as a tradesperson, however, that won’t be covered by your insurance. For example, tool and equipment insurance won’t cover standard wear and tear over time, while there may be ‘single item limits’ on how much a tool or piece of equipment can cost.
Any claims related to theft may not be covered if the proper security measures weren’t put in place. Ditto any situations where you or your employees were deemed to be acting inappropriately or irresponsibly.
Again, you should make sure you thoroughly read the terms and conditions of every aspect of your tradesman insurance policy.
Do I need tradesman insurance?
No one likes to dwell on worst-case scenarios, but when working as a tradesperson, the risk of injury or property damage is real. Tradesman insurance, and all it covers, can help make sure you and your customers are protected if something does go wrong.
There is only one form of business insurance you may be legally required to take out as a tradesperson: employers’ liability insurance. If you have even one person working for you – and they aren’t a member of your family – the government states you need an employers’ liability insurance policy worth at least £5 million from an authorised insurer. Failure to do so could result in a fine of £2,500 for every day you are not properly insured.
However, just because other forms of business insurance aren’t a legal requirement, it doesn’t mean you don’t need them as a tradesperson. There are various situations in the trade industry where you would be thankful for having a solid tradesman insurance policy in place.
This is most evident in the case of public liability insurance. If you were a plumber and a pipe you installed later burst, any damage caused would be covered by your public liability insurance. This policy would also help if a member of the public is injured by one of your workers as they walk past your building site.
Similarly, if you are a builder, and you incorrectly advise a client on the best way to install a new wall in their home, professional indemnity insurance can pay for the cost of fixing the error.
Contract works insurance can help if the new-build house you are working on is damaged in a flood or fire, while tradesman tool insurance is there if your key equipment is damaged or stolen and needs to be replaced.
» MORE: Do I need business insurance?
How to choose the best tradesman insurance deal for your business?
First, you need to make a thorough assessment of all the risks associated with not just your industry, but how your specific business operates. From this, you can draw up a list of the various policies you would want included in your tradesman insurance deal.
» MORE: Compare business insurance
Tradesman Insurance FAQs
Although the only form of business insurance that is legally required for tradespeople is employers’ liability insurance, and then only if you employ non-family members, there are a number of policies a tradesperson should take out to ensure their business and customers are best protected.
This would most likely include, but is in no ways limited to:
- public liability insurance
- professional indemnity insurance
- tool and equipment insurance
- personal accident cover
While it is not a legal requirement, public liability insurance is arguably a must-have for anyone working in the trade industry.
The risk of injury to a client, visitor or member of the public – and to yourself – is not to be taken lightly, nor is the cost of any property damage caused by your work. Public liability insurance helps with both.
If you were only to get one form of tradesman insurance (assuming you have no employees), it should likely be public liability insurance.
Tradesman insurance is the name for the collection of insurance policies that tradespeople might need, for example, employers’ liability insurance and public liability insurance. It isn’t a specific form of insurance itself.
This is the same for business insurance, which is a general term covering many different specific types of insurance businesses might consider, rather than one form of insurance. This will include policies that also fall under the tradesman insurance banner, as well as those that do not apply to tradespeople.
No, you will not pay VAT on any of the policies contained within your tradesman insurance. You may, however, pay Insurance Premium Tax, which will normally be included in the price of your premium.
Not all forms of tradesman insurance are tax deductible. Policies such as public liability insurance and professional indemnity insurance, which are mainly for your business benefit, are. However, personal accident insurance is not.
There are a huge number of jobs that would fall under the trade category. Typically, they would be professions which require a specific set of manual skills, knowledge and tools.
This can include, but is far from limited to:
- plumbers
- electricians
- builders
- labourers
- carpenters
- carpet installers
- painters and decorators
- locksmiths
- mechanics
Many of the insurance policies applicable to these professions would also be suitable for other sectors, such as beauty and wellbeing, and healthcare.
The size of your insurance policy’s excess – that is, the amount you agree to pay at the start of a claim you make – will be determined by a number of factors. These include:
- the cost of the claim
- the policy you are claiming on
- the size of your insurer’s compulsory excess
- whether you want to pay any voluntary excess (doing so can reduce your premium)
Alongside the policies that will typically fall under tradesman insurance, you may also want to consider business contents and commercial property insurance if your business is based at a business premises.
Similarly, if your business supplies any products, you should look into product liability insurance.
Business interruption insurance, meanwhile, can help if your business has to halt trading for reasons outside of your control.
About the Author
DIVE EVEN DEEPER
Craft Insurance
by Henry Williams
Bricklayers’ Insurance
