Tradesman insurance policies vary widely in terms of
- the premium you pay
- the level of cover you get
- the excess (how much you pay if you have to make a claim)
- the service
The cost of premiums can vary widely between trades and insurers. One site we visited quoted a combined Public and Employers Liability policy for a plumbing and heating engineer at around £1000 a year compared to £235 for a carpet fitter so its not easy to give an average figure.
Self Employed and Employers
The cost of liability insurance depends on the risks of your trade, the number of employees, subcontractors (insured and uninsured) and turnover.
If you're self employed sole trader and don't have anyone working for you then you need Public liability for yourself only. If you are a plumber with one worker then you would need two Public Liability covers and one Employers Liability cover. If two of you are trading as a limited company you need two Public Liability and two Employers Liability covers, as you're both looked on as employees.
Monthly Payment Options
You can pay the annual premium up front at the start of the policy, or spread the cost by paying monthly, although there's often a charge for this. Some insurers offer interest free payment plans. You might make savings by buying cover that lasts for over a year.
The Best Quotes
You get what you pay for, so don't leap in with both feet and opt simply for the cheapest. It pays to thoroughly research your market before you buy as you may stick with the same broker or company for many years.
£1m, £2m and £5m Public Liability
Insurers normally offer £1 million, £2 million and £5 million worth of public liability cover. Others offer more. Many tradesmen opt for £2 million cover. Sole traders working on small jobs may decide £1million public liability is sufficient.
Many local authorities demand a £5 million minimum of indemnity. If you're working for a main contractor they may specify a limit to meet their own insurance conditions. Most insurers expect a sub contractor to be insured for at least £2 million.
£5m is the legal minimum for Employers' liability cover - some insurers offer twice that. Here, insurance premiums are traditionally based on the annual wage roll, but more and more insurers are working out premiums on a per capita basis i.e. charging per employee. More hazardous occupations are still rated in the traditional way.
Guide to Main Insurance Costs
The following is a guide to the level of cover to consider taking out:
- Business interruption - work out how much profit you'd lose if couldn't use your premises for a year, plus extra expenses (eg alternative premises)
- Goods in transit - the maximum value of goods you transport in any one shipment
- Buildings, contents and vehicles - insure for their current rebuild or replacement cost
- Public liability - if you have 20+ employees, consider at least £5 million
If you get alternative quotes check they are on a like-for-like basis as there may be gaps in cover
It's important that you look at not only the price, but also the overall cover, including the level of service provided (eg risk management, legal advice, 24-hour helpline).
How to get Cheap Tradesman Insurance
- Have a written health & safety policy you can show insurers
- Carry out a regular risk assessment of the workplace
- Comply with the requirements of the Health and Safety At Work Act
- Join a trade association
- Register plant with The Equipment Register
- Code or fit larger items of plant with tracking devices
- Keep up to date with training issues for your trade
- Make sure plant and machinery are regularly serviced
- Keep your trade premises in a good repair
- Keep plant and machinery fenced and guarded on site
- Combine all your insurance cover into a single policy with one renewal date
- Some insurers offer a discount if you insure your business and fleet under one roof
- Keep premises secure (BS standard locks, intruder alarms, CCTV etc)
- Choose premises that are self contained with their own lockable entrance door
- Locate in an area that's free of flooding and subsidence and with a low crime rate
- Choose a higher excess to reduce the premium
- Keep business money in a secured locked safe
- Buy an insurance package with interest free monthly payments
- Don't operate outside Great Britain, Channel Islands or Isle of Man
- Don't supply products directly or indirectly to the USA or Canada
- Don't leave premises unoccupied for long periods
- Don't store stock in basements where it's liable to dampness
- Ensure all exit doors meet minimum security requirements eg a mortise deadlock with 5 or more levers and/or conform to BS3621
- Some insurers won't pay out if you don't uncover theft by an employee within 7 days, so make sure you have good accounting systems in place
- Insurers demand a certain level of security as a condition of cover, often within a specific time period of the cover starting (eg 30 days). If it's not implemented and there's a break-in, say, and heavy plant is stolen you won't be covered
- Some insurers won't cover theft by an employee who is legitimately on the premises. Check the small print. This type of insurance is sometimes called Fidelity Guarantee
- Be aware of any pre-set conditions and exclusions. For example some cover is dependent on you having a specific type of alarm fitted or securing your equipment in a particular way
- The less secure the location where you keep business money (eg at your home or an employee's home), the lower the amount you can expect your insurer to pay out in the event of an incident
Health & Safety @ Work Act 1974
Britain's construction sector employs 2.2 million people, making it the country's biggest industry. According to the Health & Safety Executive, it's also one of the most dangerous. In the last 25 years, 2,800 people have died from injuries they received while working in construction work. Many more have been injured or made ill.
The main causes of accidents are:
- falling through fragile roofs and roof lights
- falling from ladders, scaffolds and other work places
- being struck by excavators, lift trucks or dumpers
- overturning vehicles
- being crushed by collapsing structures
All tradesmen must comply with the Health and Safety at Work Act. You face a hefty fine or even imprisonment if you don't. You'll also be wide open to claims from employees who suffer injury or sickness because of their work.
Overseen by the Health and Safety Executive (HSE), the Health and Safety at Work etc Act aims to create a safe working environment for all trades.
Building site accident claims
The litigation industry is booming, with more and more ambulance chasers filing claims for accidents at work or work related ill health. There are a lot of personal injury solicitors out there actively touting for business from workers who've had building site accidents.
On large contracts, many trades work on site at the same time - plumbers, plasterers, joiners, painters, forklift drivers, industrial cleaners, scaffolders, roofers, welders, etc., using different types of potentially lethal machinery and equipment. The increase in the number of migrant workers means that often many different languages are spoken on site. Without proper training, this can lead to confusion and unnecessary accidents.
In the event of a serious injury, you could find yourself facing a potentially damaging claim for compensation as well as legal costs.
The most common building site claims relate to:
- Falls from heights (scaffolding, ladders, roofs)
- Manual handling and lifting accidents
- Building site machinery
- Trips and slips
- Falling materials and debris
- Untrained workers
Falls from height are particularly common - according to the HSE, 4,000 British workers sustained serious injury after falling from height in 2008/09.
If you work at heights, it's critical that work is planned and supervised, and that the equipment is suitable for the job and kept in good condition. If you don't you face the likelihood not only of legal compensation claims by injured workers but prosecution by the Health & Safety Executive which could run into thousands of pounds in fines and court costs.
Working at Height
Working at height is by its very nature dangerous which is why the insurance premium is more expensive. Around 70 people die at work in the UK every year as a result of falls from height. Some trades - scaffolders, roofers, painters, electricians, glaziers, window cleaners, aerial and satellite TV installers to name a few - work at height day in and day out.
Some insurers won't even consider some types of occupations involving heights - roofers, for example, are often excluded because of the dangers.
Insurers will look more kindly on you if you have a good health and safety record and follow the procedures laid down by the Health & Safety Executive and in particular the Government guidelines in the Working at Height Regulations 2005.
The regulations lay down the employer's duties and give advice on safe working practices, not least the need for the right equipment and its proper use. Ladders, for instance, should only be used for jobs where there's no alternative and jobs are likely to be short in duration. Otherwise alternative methods - eg, scaffold towers, lift equipment with safety harnesses - are always preferable.
For the peace of mind alone, it might make sense to invest in tradesman insurance to cover the cost of claims arising from injuries to you, your staff and members of the public and damage to property.
A good insurer who knows your trade will advise you on risk management to reduce the likelihood of a claim for damages arising from working at height.
Did you know...?
If you have more than 5 employees, you must have an up to date written health and safety policy. Health and safety rules are vigorously enforced by the Health & Safety Executive or the local authority.
Further information can be found at the Health & Safety Executive website at http://www.hse.gov.uk or by telephoning the helpline number on 0845 345 0055.