What Sets Your Insurance Premium as a Tradie?

Insurance premiums are the regular payments tradies make to keep their insurance cover in place, protecting against potential financial setbacks caused by accidents, injuries or property damage. One question comes up often: Can tradie insurance premiums be managed or controlled?

The answer is yes, but with certain conditions. Tradie insurance cost comes down to the factors insurers look at: your trade, your turnover, the limit you choose, how many people work for you, how much of the work is subcontracted, your state and your claims history. Some of these are within your control and others are not. For instance, keeping a strong safety record and choosing appropriate cover levels can have a positive effect on costs, while outside factors like industry risks and economic changes may push premiums higher despite your efforts.

In this blog, we will explore five reasons why insurance premiums can go up for tradies, with practical tips to help you manage them.

1. Cover choices

One of the main factors that can lead to higher insurance premiums for tradies is the cover you choose when setting up or renewing a policy. Choosing higher limits or adding extra covers, such as personal accident and illness cover, tools insurance or public liability insurance, usually means a higher premium.

For example, a tradie who adds cover for expensive machinery or tools against theft and accidental damage will usually pay more than someone who limits their policy to basic liability insurance. These extra covers add protection, and they add to the premium.

Managing your cover choices

To manage premium costs, tradies should review their insurance policies periodically to check they are not over-insured. You can review it yourself or ask a broker who arranges tradies insurance to look at your specific risks and identify which covers matter most for your work. Check you are not paying for cover you no longer need.

2. Work practices and safety standards

Unsafe work practices or not following industry safety standards can significantly affect the premium for tradie insurance. Insurers closely evaluate the risk level of a tradie's work, including how they carry out their tasks and follow safety protocols. Insurers look at your claims history when they set the premium.

For example, a tradie working at heights without adequate fall protection equipment, or skipping safety inspections, may be flagged as high risk by an insurer. Such practices not only increase the likelihood of accidents but can also result in higher insurance premiums.

Managing work practices and safety standards

Tradies can help keep premiums in check by putting safety first in every part of their work.

• Follow all relevant industry regulations and safety guidelines to show a commitment to safe practices.
• Stay up to date through regular training, so all workers have the knowledge to minimise hazards.
• Invest in good quality safety gear and make sure it is used correctly and consistently on every job.

If your premiums are going up, contact Tradies365 to talk it through.

3. Insurance gaps

An insurance gap occurs when there is a lapse or shortfall in cover, leaving certain risks unprotected. For tradies, this can happen if the limits are too low (to keep the premium down), or if the policy does not account for new risks due to changes in the scope of work or assets.

Expanding cover to fill a gap, whether by increasing limits or adding missing covers, usually means a higher premium. Leaving a gap open means a loss that falls into it isn't covered.

For example, a tradie who upgrades their tools but doesn't immediately update their tools insurance might face uncovered losses in the event of theft or damage. Once the policy is adjusted to include the new equipment, the premium is likely to increase to reflect the higher value being insured.

How to manage insurance gaps

To stop gaps opening up:

• Schedule yearly or six-monthly reviews of your insurance policies to check they reflect your current needs.
• Whenever there are changes in your business, such as new equipment, expanded services or more workers, update your insurance straight away.
• Avoid letting policies lapse, as a lapse can leave you uninsured and make cover harder to get later.

4. Missed premium payments

Missed premium payments can lead to your policy being cancelled, which can leave you uninsured and make cover harder to get later.

To keep your payments on time, tradies can manage their finances ahead of time:

• Set payment reminders: Use digital tools or apps to schedule alerts ahead of due dates.
• Automate payments: Where possible, set up automatic payments from your account so payments are made on time without manual effort.
• Keep a financial schedule: Keep your financial records organised, and set aside funds specifically for insurance to avoid cash flow issues.

5. Poor claim management

Poor claim management can lead to higher insurance premiums for tradies. Frequent or poorly documented claims can lead insurers to treat you as a higher risk, which can mean higher premiums or stricter terms.

For example, if a tradie lodges many small claims without a clear need, insurers might adjust future premiums to account for the extra cost of administration and payouts.

How to manage claims well

• Think about small claims: Frequent minor claims can raise red flags with insurers, but always tell your insurer about any incident your policy says you must report.
• Keep detailed records: Keep organised documentation, including photos, receipts and reports, to make the claims process easier.
• Talk to your broker: If you need to claim, call us. We manage your claim with the insurer from start to finish. The insurer decides whether it's paid and how much.

Protect your trade and plan for your future

At Tradies365, our brokers arrange insurance for Australian tradespeople. We can compare policies from insurers, help you choose cover for the work you do, and talk you through what affects your premium.

Don't leave your livelihood to chance. Contact us to get a quote.

Read more: what insurance do tradies need and how to compare insurance policies.