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Insurance for trades 

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When it comes to trades like construction, plumbing and electrical there are unique risks associated with people and property. 

For these businesses liability can become an issue in the event that there is any damage to property as a result of the work being done. 

As well as business assets cover, any tradesman or trade company should have some form of liability cover to protect their business from unavoidable risks. In many situations general liability cover is required before a tradesman can work on site or secure a contract.

There are three important types of liability insurance that may be relevant for a trade business.

These include general liability, employer liability and statutory liability.

General liability

This type of insurance is also known as public liability insurance which can cover the tradesmen or business against claims made for unintended or accidental damage to other people’s property. This kind of insurance can also cover costs involved with ligation or investigation.

E.G. A painter is working up on some scaffolding, painting the exterior of a building. Whilst painting, he accidentally drops a substantial amount of paint onto a parked car below. The painter is liable for the damage to the car. Fortunately his general liability insurance can cover the cost of the car owner’s claim.


Employer liability

This type of insurance can protect the employer from the cost of workplace related injury or illness to employees, which is not covered by the Accident Compensation Scheme. If a business employs staff, then employer liability cover is worthwhile.


Statutory liability

This kind of liability insurance can cover the business for activity carried out by the company which accidentally breaches statutes or laws. This could be activity such as violation of the Resource Management Act. Statutory liability insurance is designed to cover businesses for fines that result from such violations.


Business assets

Business assets insurance is also important for trade businesses to cover for the loss of, or damage to important equipment like tools. For tradesmen it is important to ensure that their business assets insurance provides replacement cover for their tools rather than providing market value cover. Market value only provides cover for the depreciated value of the tools which means that a tradesman may have to spend time looking for 2nd hand tools because that’s all they can afford.

Cover for these important assets is especially important for tradesmen as their tools and equipment are often transportable and therefore may be at a higher risk of theft. Tradesmen should also check to see if their business assets insurance covers the cost of replacing tools stolen while in their vehicle. This also ties in with commercial vehicle cover which is important for businesses such as tradesmen who may be heavily reliant on their car, van or ute.


Trades check list

Find our if your current business insurance is really what you need with our 10 point checklist for trades.