Tradesmen who are looking for the most appropriate type of insurance when setting up a business can often find themselves confused with the sheer number of options available on the market.
From the all-encompassing tradesman insurance, to policies tailored to specific trades, e.g. electrician insurance, the choice can be overwhelming. So to help you work out what policy would suit you, we’re taking a look at the compulsory and optional insurance cover tradesmen can choose from.
The first step, is understanding which types of insurance tradesmen are required to have by law, which are best practice to have, and which are optional;
Employer’s Liability Insurance
In the UK, the only compulsory cover for tradesmen and businesses in all industries is employer’s liability insurance.
Employer’s liability insurance (EL) insurance is necessary for any businesses that employs staff. It will cover a business for any legal liability arising out of injury or disease sustained by an employee during their employment.
Employer’s liability insurance is also required by businesses who are employing occasional or temporary staff. However, there are two scenarios where a small or start-up business may be exempt from having to take out employer’s liability insurance:
1. Limited Companies
If you are a director of a limited company, own a minimum of 50% of the shares and have no other employees, you may be exempt.
2. Unincorporated Businesses
A business that is operating as a sole trader or partnership, or only employs close family members will often be exempt.
The extent of employer’s liability insurance is subject to the insurer’s agreement, and in some circumstances, clerical employees can also be included for some contracting trades without an additional charge.
Good Practice Insurance
Public Liability Insurance
Public Liability Insurance covers businesses in the event of a claim made by a member of the public who has suffered an injury, or damage to their property as a result of the business’ activities.
There are numerous circumstances which can lead to a claim being made against a tradesman. This could be a member of the public tripping over your equipment, or damage you cause to a property you are working in.
Public liability insurance can be beneficial for tradesmen working at customers’ properties, and those frequently visited by clients.
Public liability insurance is not a legal requirement; however, it can provide you with significant levels of financial protection if a claim is made against your business.
Many customers will only employ tradesmen that have suitable public liability cover, so a good policy can also help you to win more business.
Personal accident cover
Some insurers can offer an insurance type known as personal accident cover, which covers you if you suffer serious and permanent bodily injury in the workplace.
This cover can vary depending on each individual insurer, and in some cases a lump sum can be paid. Alternatively, pay outs can be obtained on a weekly basis. This insurance type is not compulsory under UK law.
Tools and transit cover
Tools and transit insurance can cover you in the event of loss or damage to any tools of trade which are associated with your business.
This type of cover will ensure that all tools are also covered while they are in transit – for example in the event of theft from a van. This can be a significantly important insurance option for small businesses who work off-site and within client’s properties on a regular basis.
Contract works insurance
Many tradesmen will work with contracted clients, which makes contract works insurance a consistently popular option for small trade businesses.
Contract works insurance can cover a business for any loss or damage to the contract works such as materials or any other goods incorporated within the contract. This will cover the loss or damage when on the contract site, in transit to and from the contract site, or if it is temporarily stored elsewhere.
Business contents & stock insurance
This type of cover can be separate or can be combined with other cover, depending on the individual insurer.
Business contents insurance will ensure that any loss or damage to any contents within a business’ premises (excluding stock) will be covered.
Stock insurance, on the other hand, caters for the loss or damage of any business stock within the premises. If you have high-value stock, it’s a good idea to get it covered.
Business interruption insurance
This particular insurance type can offer small businesses cover in the event that there is a loss of gross income due to ‘interruption’, such as in the event of damage within the vicinity of the premises that hinders access and therefore operation of the business, loss arising from closures of a premises as a result of vermin, or the failure of public supply of water, gas or electricity.
Business interruption insurance is typically useful for tradesmen who work at their own premises.
When searching for appropriate insurance, it is important to understand the different types available to you and which are likely to be the most relevant for your individual business requirements.
Once you have determined this, you’ll be able get the cover that best suits you and your business.
Other types of business insurance
ByteStart has a series of practical guides to help businesses get to grips with the various types of business insurance, including;
- Which Types of Insurance Must Your Business Have?
- What is Public Liability Insurance? – A Guide for Businesses
- What is Employers Liability Insurance, & Is My Business Legally Required to Have Cover?
- ByteStart’s Guide to Professional Indemnity Insurance – What You Need to Know Before Buying Cover
- Guide to Intellectual Property insurance for start-ups and small businesses