What Type of Insurance Does a Tradesperson Need?
Depending on your profession and personal circumstances, the response to this question may vary slightly. Some tradespeople will require higher levels of tradie insurance, while others will require less, but all tradespeople require some form of tradesman insurance.
There are two categories of tradesman insurance: general insurance, which includes public liability and tool insurance, and life insurance, which includes income protection and other personal risk covers.
Public liability insurance and tool insurance are the two primary types of coverage provided by general insurance. There are a few extra covers that can be included for more sophisticated business arrangements, but these are the two that the majority of tradespeople will require.
Public liability insurance will cover any damage you cause to someone else’s property or any injuries that you are deemed to have caused, directly or indirectly. Your tradesman’s policy of public liability insurance will cover the cost of any damages or legal action brought against you.
Your instruments are covered against loss or damage through tool insurance, which is rather basic. The specifics of the coverage may vary from insurer to insurer, but in general, a tradesman tool insurance policy will protect your tools against theft, fire, and water damage, as well as damage caused by a vehicle collision or rollover.
Some tool insurance policies will only cover theft while the instruments are secured, whereas a small number of policies will also cover your gear when it is not locked up. Similarly, some plans cover accidental damage to your tools, but others only cover certain occurrences, such as vehicle accidents and fires.
Most policies for public liability insurance are fairly similar across insurers, but tool insurance policies can vary greatly; therefore, it is highly recommended that you work with an insurance broker who is familiar with the trades industry and can match you with the policy that best meets your needs and budget.
This category of insurance encompasses more than just life insurance. Included as well are income protection, TPD, and trauma insurance.
For many tradesmen, particularly younger tradesmen without significant debts or dependents, income protection will be the sole form of protection they consider. Income protection is designed to secure your income while you are unable to work and will pay you a monthly benefit until you can return to work.
There are a variety of choices available for income protection, and the policies can vary greatly from insurer to insurer. For this reason, it is imperative that you work with a financial planner or insurance agent who is knowledgeable about the business and can offer a policy that meets your specific goals and budget.
Younger tradespeople are less likely to purchase TPD insurance, despite the fact that it is a vital protection. TPD stands for Total & Permanent Disability, and the insurance will pay you a lump sum if you sustain an injury that leaves you in a condition so severe that it is unlikely you will ever work again.
All of these insurances are significantly more vital for the tradesperson who has debts or a family, in addition to a few others. Life insurance and trauma insurance should be purchased by all tradies, but in practice, most just purchase income protection insurance and occasionally TPD insurance.
If you die or are diagnosed with a terminal illness, life insurance will provide you with a lump sum payment. Typically, the money will be utilized by your surviving family members to repay your business and personal debts, as well as to create a financial cushion now that their primary source of income is no longer available.
Trauma insurance is a little different in that it pays out considerably sooner, when you are initially diagnosed with a critical disease. The funds from your trauma insurance can be used to pay for your treatment and recuperation, as well as alleviate the financial strain associated with conquering a serious, but not necessarily life-threatening, disease.
As you can see, tradesman insurance encompasses a variety of policies, and while some are more popular than others, including public liability, tool insurance, and income protection, each product has its place in a comprehensive tradesman insurance package.
Regardless of the type of coverage or mix of coverages you believe you require; it can be useful to consult experts in tradesman insurance. Brokers can assist you in putting together the package that best meets your needs, as well as your budget, and offers excellent value for your money.