Tradies — this one’s for you.
In today’s article, we’ll tell you what types of insurance you need if you work in a specialized trade.
The information here will be applicable to HVAC, welders, electricians, woodworkers, painters, commercial cleaners and more.
We’re focusing on sole traders and companies that employ tradesmen — not general contractors.
Before we go deeper into your commercial insurance options and how they work, start by familiarizing yourself with two types of insurance that you need above all else: liability insurance, in case your work causes someone injury or damages their possessions; and property insurance in case something happens to your tools, equipment, or supplies.
With that in mind, we’ll go a little deeper.
What Insurance do Tradesmen Need?
Let’s take a closer look at those two main types of insurance.
Liability insurance covers third-party property damage and bodily injury.
And property insurance protects against damage or theft to your own valuables.
Liability claims are by far the most common among tradesmen.
Just think about all the skilled, intricate work that you’re required to do every day and the potential for error.
Imagine this scenario: you’re an electrician and you’ve done a routine job installing wires in a breaker box at someone’s home.
You leave and the clients are happy.
Six months later, you get word the house has burned to the ground.
After inspection, the firefighters concluded that the blaze was caused by a wire malfunction as a result of your faulty installation (the technology these days is really good at making these determinations).
As the contractor deemed responsible, you’ve just become part of a lawsuit.
Without commercial tradesmen insurance?
You’re probably looking at a pretty hefty payout and, if you decide to defend yourself in court, some steep legal fees.
With the right tradesman liability insurance policies in place? You’re covered.
Note: Even if the investigation wasn’t able to clearly determine the cause of the fire, as someone that worked on the breaker just six months prior, you’d likely be pulled into the claim and would have to defend yourself in court regardless.
How much liability insurance do you need?
You should carry a policy of at least $2 million, though some general contractors won’t hire you unless you have $5 million.
If you have a fairly new contractor business and you feel like you can’t afford the whole package, start with liability insurance.
As you become more established, you can expand your policy to include more specific coverage.
What about property insurance?
Let’s look at another nightmare scenario: say you run a welding company and you rent or own a commercial space where you store your equipment.
When you show up one morning, the place has been broken into and your whole fleet of stick welders and angle grinders have been stolen.
Replacing them out of your own pocket would cost thousands of dollars.
This is where your commercial property insurance kicks in to reimburse you for the stolen goods so you can replace them without breaking the bank.
What is Included in Tradesmen Insurance?
As your business grows, there are more commercial insurance options at your disposal.
Perhaps you’ve added an office space, bought some new computers or upgraded on tools.
Aside from liability and property, here are a few more coverages you can add.
Tool floater: covers your tools, wherever you go.
We’ll reimburse you for goods stolen from the job site, your office, your home or anywhere else.
Contents insurance: if you work out of a small office, it’s a good idea to add this to cover your furniture, computers and supplies.
Commercial fleet: commercial car insurance for service trucks out on the road.
Cyber: covers the cost of replacing stolen data as well as lost revenue as a result of a cyber attack.
Here’s a question: if you suddenly lost all access to your CRM, would you be able to run your company?
If the answer is no, you need this coverage.
Not a lot of tradesmen think to get cyber insurance, but we recommend it.
Modern day subcontractors are highly dependent on CRMs to keep track of day-to-day tasks and invoicing.
A cyber attack or loss would impact your ability to work.
It would also cause a delay in getting back on track, which is why a cyber policy includes business interruption insurance.
Expert Insurance for Tradesmen in Minutes
Tradesmen insurance doesn’t need to be complicated: you need liability insurance in case you cause harm to someone else, and commercial property insurance to cover your own equipment.
And the bigger your business, the more coverage you might consider.
KBD Insurance can help you customize your plan: all you need to do is answer a few easy questions about your business, and you’ll be well on your way to getting a tradesmen insurance quote.