Tradies Ultimate Guide To Public Liability Insurance

July 24, 2023
Trades
Public Liability Insurance

As a tradie, understanding the importance of public liability insurance is crucial to protect your business from potential loss. This great guide will give you the basics of public liability insurance and why it is essential for tradies.

Why Does A Tradie Need Insurance?

It’s important to acknowledge the risks of working in the construction industry. In Australia, it’s considered one of the most hazardous professions, with a high number of work-related injuries, illnesses and fatalities. In fact, according to Safe Work Australia, tradies make up a significant 58% of serious claims for workers’ compensation.

Given these statistics, it’s crucial to consider getting tradies insurance cover. This can provide financial protection against a range of potential consequences that may arise from workplace accidents, saving you from having to cover the costs out of your own pocket. In this article, we’ll outline some key policies that all tradies should strongly consider.

Is Tradie Insurance Compulsory?

While not mandatory, tradie insurance is strongly advised, particularly public liability insurance and tool insurance. This coverage can offer financial security against unforeseen risks or those not accounted for, allowing you to focus on your work with added confidence and reassurance.

Read more to know about the types of insurance and how they protect you as a tradie.

What Insurance Do Sole Traders Need To Consider In Australia?

This section outlines the 4 main types of insurance cover sole traders may need and should strongly consider.

  • Public Liability Insurance

Public liability insurance is highly recommended when you take on work for your trade clients. It covers property damage and injury to third parties. It’s not just about protecting others, though. It also shows the authorities that you are prepared for unlikely scenarios and are ready for the worst. Without this insurance, the legal consequences of an incident could harm your company’s reputation and finances.

It important to understand, there are limitations to all insurances and any claims are considered under the terms and conditions of the policy, including additional options you may select. Before, and upon acquiring any insurance, you should read all policy documents. 

  • Commercial Motor Insurance

In order to comply with legal requirements, it is essential to have third-party vehicle insurance for any vehicle used for work-related purposes. Comprehensive cover provides cover for theft, damage, and 3rd party property damage. Vehicles used exclusively for work, such as a van or ute, or even your personal car, should have insurance connected to the vehicle’s registration. For bigger projects, equipment like earth movers and excavators also fall under this category and require insurance cover before starting work on a site.

  • Personal Accident and Illness Insurance

Personal Accident and Illness Insurance cover is suitable for individuals and sole traders, including those without employees (sole traders). However, it is particularly important for sole traders. It serves as a form of protection for you and your dependants (partner/family) if you are unable to work due to an injury or illness*. While not mandatory by law, this cover offers peace of mind and is a crucial financial safety net for you and your family. The cost of the cover can vary greatly, depending on the desired income and age. It is important to note that this is different from income protection insurance.

If the optional Illness benefit is selected, you can be covered for illness and disease that prevents you from working for a period of time. Limitations do apply, including an exclusion on pre-existing conditions.

*Up to the maximum benefit period shown on the Policy Schedule, less excluded period of claim. Conditions apply, refer to Product Disclosure Statement and Policy Schedule. It’s important to note that the IMAR Personal Accident & Illness cover is not Income Protection – Income Protection cover has options for a longer benefit period and covers more insurable events. It is only available from a life insurance provider and protects you if you’re unable to work for a specified period due to almost any illness or injury. Typically a higher premium applies for Income Protection due to the additional coverage. If you’re interested, this cover is available through Gallagher Benefit Services, who can advise you on whether this insurance is right for you.

  • Tool Insurance

Tool Insurance cover is also not legally required but should strongly be considered. It helps protect your tools and equipment against damage, loss or theft. Similar to personal insurance, the prices for this cover vary and can be customised to suit you and your business.

There are important limitations and conditions on cover, particularly where tools are stored and how they are secured; including a deprecation factor on insured values. Please refer to Product Disclosure Statement.

How Much Does Public Liability Insurance Cost For A Tradie?

Public liability insurance is highly recommended for tradies. The insurance cost can vary depending on several factors. Sole trader carpenters can expect to pay as little as $40¹ per month, while certain sole trader sparkies, handymen, and painters may pay around $50¹.

Two Factors Influence Public Liability Insurance Cost

  1. Type of Trade: Plumbers generally face higher costs due to increased risks compared to carpenters or electricians. Given the nature of their work, window cleaners often incur higher premiums than other trades.
  2. Business Size: The size of the business (staffing and revenue), impacts insurance costs. Generally, as the number of employee’s increases, so does the potential risk of accidents to third parties or property.

As Public Liability insurance can be quite detailed the cost depends on your occupation, your State and your turnover. To be 100% sure it’s best to speak to one of our imar tradie brokers to get a detailed quote on 1300 512 428.

Who Can Take Out Public Liability Insurance?

Tradies, sole traders and contractors such as the following are covered by public liability insurance:

All trades including but not limited to: Carpenters, Tilers, Cleaners, Landscapers, Carpet Cleaners, Electricians, Roofers, Mechanics, Car Detailers, Martial Artists, Gardeners, Glaziers, Bricklayers, Motor Wrecker, Painters, Lawn Care Workers, Tree Loppers, Window Cleaners, Plumbers, Plasterers, Concreters, Excavator Operators.

It is highly recommended that all tradies think about their insurance needs. Find out more on our tradies insurance page.

What Is Tool Insurance?

Tool insurance can provide cover for stolen or damaged tools and stock. Whether your tools are stolen from a locked vehicle, locked premises, or from a locked toolbox bolted to a vehicle or if they are damaged due to fire, vandalism, or accidents, tool insurance may offer protection.

What Is The Cost Of Tool Insurance? 

The cost of tool insurance is less variable compared to other types of insurance. The primary factor influencing the price is the amount you wish to insure. However, pricing can also vary based on location and state regulations. Annual premiums for tool insurance can start as low as $341, and cover can extend to tools worth thousands of dollars.

imar tool insurance covers a range of items used in your business, including power tools, tools of the trade and stock.

Do I Need Business Insurance As A Sole Trader?

Despite the hard work and hours, running your business as a sole trader has a lot of perks. But, as a sole trader, it is your legal responsibility to manage all aspects of your business, including handling its insurance needs.

What Type Of Insurance Do I Need As A Sole Trader?

Choosing the insurance cover for your business can be challenging. Let’s review the main insurance covers you need as a sole trader.

  • Personal Accident and Illness Insurance

As a sole trader, your business is extremely vulnerable if you cannot work. This is where personal accident and illness insurance steps in by providing weekly payments if you suffer accidental injuries or covered illnesses that prevent you from working for a period of time.

  • Public Liability Insurance

While not mandatory, public liability insurance may be necessary depending on your industry and circumstances. This cover may protect you against claims from third parties, such as suppliers, customers, or the general public.

  • Professional Indemnity Insurance

If your business offers professional advice to clients for a fee, it is strongly recommended you consider professional indemnity insurance. This cover may protect you if a client files a claim against you to recover losses resulting due to negligence, errors, or omissions.

Is Builders Insurance Compulsory?

No, builders insurance isn’t required by law. But, it is usually a requirement in contracts. Both councils and banks may verify that you have a Builders Public Liability and contract works insurance at the very least

How Much Does Builders Public Liability Insurance Cost?

The cost of a builder’s public liability insurance depends on the annual turnover and the state of residence. A builder can combine it with their contract works liability insurance on an annual basis.

To find out more, contact our tradie brokers to get a detailed quote.

Do Self-Employed Builders Need Insurance?

Being prepared for the worst is recommended, whether you’re a self-employed builder or not. As a self-employed builder, you may need the following insurance:

  • Public Liability Insurance for Builders

Public liability insurance is the most essential insurance for builders as it provides cover for property damage or personal injury to third parties. The cover typically starts from $5 million, but higher limits of $10 million or $20 million are also available.

  • Tool Insurance for Builders

​​As a self-employed builder, your tools are essential to your livelihood. Unfortunately, stolen tools are one of the most common claims made by a tradie. Tool insurance ensures that you are financially covered and able to replace expensive tools quickly, allowing you to return to work swiftly.

  • Contract Works Insurance for Builders

Contract works insurance, covers material loss or damage and public liability. In order to work on certain residential and commercial sites, it can actually be mandatory to have contracts work insurance. So it’s important to be aware of any obligations you may have prior to starting work.

Does A Labourer Need Public Liability Insurance?

As you are aware, labourer’s face various risks while working, including the potential damage to a third party’s property or the possibility of injury or death to a third party. Fortunately, public liability insurance is available to all labourers through imar. This type of insurance cover can help mitigate your financial risks and may even be a requirement for certain worksites. Whether mandatory or not, having public liability insurance is an essential consideration for any labourer.

How Much Cover Do I Need as a Labourer?

Figuring out the appropriate amount of cover can be challenging, and there is no straight answer. Currently, the minimum cover available in Australia is $5 million. However, insurers typically offer up to $20 million in cover and can even exceed that amount, although this is rare.

Historically, a $5 million cover has been adequate for residential or small commercial projects. However, there has been an increasing demand for $10 million public liability policies. It is important to consider the nature and location of your work and select the option that suits your needs.

What Insurance Does An Electrician Need To Consider?

As an electrician in Australia, the insurance cover you need depends on factors such as turnover, employment status, tools owned, and job location. Worker’s compensation insurance is legally mandatory if you have employees. The other types of insurance you can consider are:

  • Public Liability Insurance for an Electrician

The most common policy for electricians is public liability insurance. Electricians’ public liability insurance can provide protection against claims filed by third parties, customers, the general public, contractors, and suppliers. It includes cover for third-party personal injury, property damage, and legal expenses incurred in defending a claim.

  • Tool Insurance for an Electrician

Tool insurance for electricians can offer protection for your work tools and equipment in case of theft, damage, or loss. It covers items like handheld tools and mobile phones used in your business. This insurance also includes coverage for damage caused by fire, vandalism, or vehicle accidents.

  • Sickness and Accident Insurance for an Electrician

Personal accident and sickness insurance provide financial support in the event of injury or illness.

Is Public Liability Insurance Mandatory for Tradies?

Legally, public liability insurance is not compulsory in Australia. As a small business owner, you haven’t committed a crime by not having this insurance. However, the decision ultimately rests with you. Opting out of cover could have devastating legal and financial consequences for the business you’ve worked hard to build.

Is There A Difference Between Public Liability Insurance And Professional Indemnity Insurance?

Yes, there is a clear distinction between public liability insurance and professional indemnity insurance. While certain policies and features may overlap, professional indemnity insurance protects you specifically from claims that may arise from the professional advice you give your clients for a fee. Injury or damage to the property is not included. On the other hand, public liability insurance covers injury and damage but not general contract disputes.

How Can Public Liability Insurance Protect Me?

In simple terms, public liability insurance can protect your business’s reputation and finances in the event of third-party injury or property damage. For small business owners in Australia, it shows potential clients and authorities that you have taken the necessary steps to prepare for unlikely scenarios. Ensuring their safety is your responsibility. The level of cover may vary among insurers, but imar offers insurance that includes:

  1. 3rd party personal injury
  2. 3rd  party property damage
  3. Advertising liability
  4. Legal costs

Is Public Liability Insurance Worth It?

As a business owner, the choice is yours. Public liability insurance is an ongoing expense for a possible event that might or might not occur. However, the potential risks of not having this insurance are significant, which is why we encourage you to fully explore its benefits before making a decision. Read more to find the cover suited to your business.

Is Tradesmen Insurance The Same As Public Liability Insurance?

Tradesmen insurance and public liability insurance are often confused, but they’re not the same. Tradesmen insurance, popularly known as trade pack insurance, is a broader policy covering various risks, including public liability. Public liability insurance specifically protects against third-party claims for property damage or personal injury caused by your business operations.

What Is Trade Pack Insurance?

A trade pack is a combination of policies customised to your specific needs. They include the following:

  1. Public Liability Insurance
  2. Tool Insurance
  3. Injury and Illness Insurance
  4. Commercial Motor Insurance

While smaller businesses and sole traders often start with the 2-in-1 package, larger companies may require multiple policies.

  • Ideal for new businesses and sole traders, 2-in-1 combines public liability and tool insurance for comprehensive cover while you’re on the job.
  • The 3-in-1 package includes public liability, tool insurance, and personal injury and illness insurance, offering added financial protection in case of injuries or illnesses that affect your ability to work.
  • The 4-in-1 trade package includes public liability, tool insurance, personal injury and illness insurance, and commercial motor insurance. It covers vehicle theft and accidental damage, including hail, storms, and collisions.

What Insurance Should I Have As A Roofer?

Roofing is a highly skilled craft that requires great knowledge and involves a certain amount of risk. As a roofer, you might consider getting public liability insurance, tools insurance, accident and sickness insurance, commercial motor insurance, vicarious liability insurance, contract works insurance and unlimited height cover.

Do Cleaners Need Insurance?

Though not compulsory, cleaners are highly recommended to have insurance to protect them, their clients, and their business. Insurance provides protection in case of accidents, damages, or any other unforeseen circumstances that may occur while performing cleaning services. Cleaners can consider having public liability insurance, workers’ compensation insurance and tools insurance cover.

Do Painters Need Insurance?

Yes, painters in Australia may need insurance. While it may not be a legal requirement in all states, it is highly recommended for painters to have insurance as it protects them and their business in case of accidents, damages, or any other unforeseen circumstances that may occur while performing painting services.

1Costs mentioned are approximate and subject to change.

Disclaimers: You should consider if the insurance is suitable for you and read the Product Disclosure Statement (PDS), Financial Services Guide (FSG) and policy wording before making a decision to acquire insurance. Please ask us for more details before we provide you with our services. Our FSG is available on our website.

Legal Disclaimer: The content – including publication links – on this website are intended only to provide a general overview on matters of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the Content is current but we do not guarantee its currency. 

General Advice warning: To the extent that any material in this document may be considered advice, it does not take into account your objectives, needs or financial situation, and is considered general in nature only. You should seek legal or other professional advice before acting or relying on any of the Content. All insurance policies contain exclusions of cover, and no claim is guaranteed. Refer to the Product Disclosure Statement.

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