What Mistakes Do Tradies Make With Public Liability?

Tradies juggle a lot, and it's easy for things to slip. With public liability, even an honest mistake can cost you. Public liability is one of the covers most tradies look at first. Working with an array of machinery, labourers and tools in an uncontrolled environment can spell disaster if even the smallest mishap occurs. Since knowledge is power, here are four mistakes tradies make when it comes to public liability insurance.

1. Not understanding what public liability insurance covers

With so many different kinds of insurance that tradies carry to maintain sufficient cover for themselves and their businesses, it is easy to misunderstand the details of each one. Public liability insurance can cover you if personal injury or damage to property happens because of something you, your employees or your subcontractors do, depending on the policy. Read what does public liability insurance cover?

Is public liability the same as workers comp insurance?

There is a common misconception that public liability insurance is the same as workers compensation insurance. If you have employees, workers compensation is compulsory (Safe Work Australia), and many tradies also carry public liability. However, public liability insurance for tradies and workers compensation insurance cover different circumstances.

• Public liability insurance can protect you against claims arising from negligence on your part or the part of your employees. If injury or damage occurs to a person or their property outside of your business, this insurance can provide cover and help protect you from lawsuits, personal responsibility for costs and potentially bankruptcy, depending on the policy.
• Workers compensation insurance can provide cover for your employees in the event of a work-related injury. It does not protect you from suits brought by those outside of your business.

2. Believing public liability insurance costs too much

Some tradies assume public liability will cost too much and put it off. Going without it can leave your personal and business assets exposed.

What sets the price

The premiums, cover and terms of individual policies differ between the many kinds of trades and their circumstances. Here are the main things that influence the cost of public liability insurance:

• Level of risk (either high-risk locations or high-risk activities)
• Your occupation
• Whether or not you work with subcontractors
• Your business's size
• The amount of cover on your policy

Read more in how much is public liability insurance?

3. Omitting important details when applying for public liability insurance

Because there are so many factors that influence the price of your public liability insurance, as well as the level of cover that suits you, it is important to share all information about your business with your insurance broker when your policy is being arranged.

What can happen if details are left out?

A complete look at your job and surrounding circumstances sets you up for a solid policy with appropriate cover. Leaving out details can have consequences, including:

• Insufficient cover: If your policy covers up to $5 million in damages and you routinely work in areas with considerably higher-priced surroundings, you could come up short if you need to make a claim. Read how much public liability cover do I need?
• Denial of a claim: Insurers can refuse or reduce a claim if they see differences between the information you provided and the circumstances surrounding the claim. For example, if a subcontractor damages property on a job site, but you failed to tell the insurer you work with subcontractors, your claim may be refused.

How can I be sure all my information is correct over time?

If you shared all of the important information when applying, you might think that your public liability insurance cover is good for the long haul. Unfortunately, this is often not the case. Here are some circumstances you should share with your insurance broker. Staying up to date with changes is essential to be sure you have proper cover.

• A change in the number of employees: This should include employees added as well as having fewer workers, because your premium may adjust up or down given the situation.
• Working with subcontractors: Some policy changes may be needed if you are working with subbies.
• Changes in typical job locations: If you have normally worked in private homes and public buildings and now work in the mines, the cost and amount of your cover are likely to change accordingly.

When should I share changes in my business with my broker?

Ideally, you should update your public liability insurance policy as soon as you experience a major change in your business circumstances. This is a good way to avoid nasty surprises if you need to make a claim. If a change slipped through, tell your broker now rather than waiting for renewal, and check your details again at every renewal.

4. Having no public liability insurance

A tradie without public liability insurance can easily find themselves in a financially devastating situation. Even though you may tell yourself that you have any number of "good" reasons to not have public liability cover, the risk of a claim stays with you.

Common reasons tradies do not get public liability insurance

• It is too expensive: There are different levels of cover, and premiums vary. Talk to an insurance broker and lay your cards on the table. A broker can talk you through the options and get you quotes for the cover you ask for.
• My employees and I are very careful: There is no doubt that as a businessperson, you watch over your employees and yourself. However, things happen that are outside of your control. Equipment breaks, machines malfunction, or a great employee has a bad day.
• I do not have time: You can send a quote request online, or call us Monday to Friday, 9am to 5pm.

Check your own policy

• Is your limit at least what your contracts ask for?
• Have you told the insurer you use subcontractors, if you do?
• Does the policy include products liability, if you supply or install products?
• What is the excess, the amount you pay towards a claim?

Read the product disclosure statement (PDS) or policy wording for the answers. A broker can talk you through the options.