Risks of not carrying Tradesman Insurance

Tradespeople are vital components in our society as they can transform living spaces and office spaces into comfortable and functional areas where we want to dwell.

Their skills can keep us in light and keep up our internet connectivity (electricians), they can provide us with the furniture we need to work at and sleep on (carpenters), they can beautify our living spaces (painters and decorators), and they can run us a hot bath and make us a cold glass of clean tap water (plumbers). Simply put, without tradesmen and women we’d struggle to exist.

Due to the nature of a tradesperson’s work, they regularly impact public space, be that in our homes or at our places of work. As such, they have the potential to create a liability for the general public, which is why it is important for trades professionals to carry tradesman liability insurance.

We look at the key reasons why public liability insurance is important and some of the daily risks tradespeople are exposed to, sometimes without knowing, and some of the other types of insurance that trades professionals might consider to enhance the protection for their businesses.

Protection for your customers and the public

As a service provider you have a duty of care to your customers. A key part of that is to ensure your customers’ project is completed to the agreed and promised standards, but arguably more important is to ensure your customers trust that you are ensuring their property is protected if an accident happens.

In addition to providing your customer with peace of mind that their property is protected, they also need to feel reassured that they are covered from any accident that may cause them bodily harm.

Tradesman public liability insurance will also cover you should you be accused of causing an accident to a member of the public. For example, you’re working at a customer’s home and the postman trips and falls over materials you’ve left lying around on the pathway to the front door. As a result, the postie’s injuries cause them to miss a couple of weeks of work, so they make a claim against you for compensation.

Protection for your business and your staff

Not carrying trades insurance exposes you, your business and your staff to the risk of not being covered should something go wrong. If you’re alleged to have caused damage to property or alleged to have caused an accident that has injured a member of the public, or if one or more of your employees has an accident whilst on site, then you could be subject to a claim.

Without cover you could be liable to cover legal bills and compensation awards out of your own pocket. In today’s litigious society, instances such as this are more common than you might think, so it’s important to ensure you’re covered.

Reputational damage can result in less work

Surprisingly, public liability insurance is not a legal requirement. However, if word gets around that a tradesperson does not carry public liability insurance or other business insurances, this could deter a customer from selecting that tradesperson for their job.

Trust is a big part of the success of many self-employed trades businesses. If customers, and fellow tradespeople, feel they can trust you and your business they will happily refer you to their contacts for other projects.

Word-of-mouth is a very powerful form of marketing for any business. It costs nothing and can help to fill the work diary of a self-employed business with very little effort. You could say that carrying insurance is a sound business investment, because it helps you win more work.

Many trades professionals, including many micro businesses, hire staff. For example, it is common for a plumber or decorator to have a junior member of staff – perhaps an apprentice – with them when they arrive to complete a job. If a tradesperson employs staff, then they must carry employers’ liability insurance by law.

In summary, carrying the right types of trade insurance can help to add credibility to your business and help to win you more work.

Which other potential risks are trades exposed to if they’re not insured?

Accidental property damage and injury are the most common risks in the trades sector, but due to the way that modern business works, there are other less obvious risks that you need to be aware of and may wish to protect yourself against.

Theft or loss of tools or materials 

How would you cope if your tools and/or trades materials for a specific job were stolen? Could you afford to pay for replacements straight away? Tool theft is common in the building trade and is estimated to cost the industry approximately £800 million each year (1). Tools insurance, which is an extension to a trades liability insurance policy can help get you ‘back on the tools’ in no time.

Alleged negligence claims 

Not all clients are easy to work for. Some will move the goalposts halfway through a job, others will change their minds altogether. Dealing with people isn’t easy and as a result clients can be hard to please. This can sometimes lead to claims of negligence in a tradesperson’s work.

Even if you feel you’ve done nothing wrong and have followed the client’s requests, you could still find yourself subject to a claim for compensation. If a client alleges you misread plans, or used substandard materials, then they could make a claim against you for their perceived monetary loss.

Professional indemnity insurance is the perfect type of cover to protect you in instances such as this. The policy is written specifically to cover for negligence claims, which will give you peace of mind you’re covered so you can concentrate on your job.

Data breach jeopardises your clients and suppliers 

As a trades professional it’s likely that you’re not an IT expert, nor are you likely to be fully conversant with data protection legislation and GDPR. If you store sensitive data about your clients and suppliers on your laptop and/or mobile phone, then you need to be extremely vigilant to avoid a data breach from a cyber-attack. Sensitive data can include bank details, address details and contact information.

Security software is a good place to start but isn’t fail-safe. Cyber criminals, or hackers as they’re commonly known, are sophisticated and can find their way into many computer systems via cunning methods that can trick even the most vigilant people.

Cyber insurance will cover your business in the event of a malicious attack on your computer systems and your data by providing access to a cyber response helpline, as well as covering you for:

• The costs of restoring data and equipment
• Informing your clients of a data breach
• Meeting ransom demands
• Loss of your net profit
• Your legal defence costs and damages that you are legally liable to pay to other parties in the event of a cyber-attack.

You’re summonsed to attend court 

As rare as this may seem, it happens. What would you do as a self-employed tradesman if you were called up for jury service? Would you be able to cope with the work you have on the go? What impact might it have on your company’s finances?

Legal expenses insurance is the ideal cover for this scenario and will cover you for loss of income and expenses if you are summonsed to appear on a jury. The policy will cover many other legal scenarios which many liabilities policies do not cover. Click here for more information about our legal expenses insurance.

You or an employee sustains an injury 

Building sites are hazardous environments to work in. How would you cope if an injury or illnesses prevented you or a member of your team from being able to work? Personal accident insurance provides financial help for employees who suffer injury or illness because of their work.

In summary 

Business insurance for tradespeople can protect you and your staff, it can protect your customers, it can help win you work, and it can minimise stress and disruption. I’m sure you’ll agree, it can be a vital component towards the success of your business.

Find out more detail about tradesman insurance in our guide to trades insurance.

Click here to get a quick online quote in less than 90 seconds for your trades insurance.

If you prefer to speak to one of our team, please call 0333 321 1403.

Sources:

https://www.pbctoday.co.uk/news/planning-construction-news/construction-site-security/74719/