Setting up as a Tradesman – Don’t Forget Liability Insurance!


We talk a lot on Money Bulldog about making the leap from employment to self-employment and earning your own money. While it’s exciting to get started and create your own business, sometimes important things can easily get overlooked, important things like Tradesman Liability insurance.

In amongst all the rig moral and expense of sorting out marketing material, coming up with a business plan, trying to get finance and heading out to look for customers, it’s easy to see how liability insurance can get put to the back of the queue of things to do or even be viewed as an unaffordable expense.

The problem with this attitude is that once overlooked, something like tradesman liability insurance tends to stay overlooked, perhaps for years, meaning you spend years at risk of accidental mistakes coming back to haunt your financial status.

Is liability insurance really necessary?

There’s a quick and simple answer to this question, YES! Let’s consider a couple of examples where tradesman liability insurance may be needed.

It’s your fault

You’re working as an electrician on a property and you get an emergency call from your wife to tell you that your child has been taken into hospital. You rush around to gather your tools and in the stress of the situation you accidentally leave a live wire uncovered and within reach of the occupants of the house. Impossible you say. I’d never do that. Well, a trusted and qualified electrician did just that whilst working on my property when he lost his head in the worry of his situation. Fortunately I noticed the mistake and secured the wire but if an accident had been caused then I think he’d have been glad of some liability insurance to pay his costs.

It’s not your fault

You’re working on a fixed scaffold and some building material gets blown off, injuring someone below. Yes you should have secured the material better but on the flip side the person who was injured shouldn’t have even been there in the first place as it is a cordoned off area with adequate signage. Even so they decide to pursue a claim against you for their injury. Whose fault is it? This will have to be hammered out through the proper legal channels which will likely cost a large amount of money. Will you be glad to have some tradesman liability insurance that includes public liability insurance as standard? My guess is that you would be.

Prioritise it

So as much as you want to plough all of your initial business capital into equipment and marketing, please don’t forget to sort out your liability insurance first. It’s no good starting a business that gains a degree of success, only to have a liability case send you into bankruptcy or lead to a winding up of the business, all because you overlooked a simple business necessity such as liability insurance.

You wouldn’t neglect to insure your home, you wouldn’t neglect to insure your car, so don’t neglect to insure your business. At the end of the day it is your livelihood and reputation that is on the line. As a final bonus, having the right type of insurance in place will often help you to win larger and more lucrative contracts from bigger clients who require the correct insurances to be in place before they will even consider a quote from a contractor.

Can you think of an example where tradesman liability insurance was needed?

3 Responses to Setting up as a Tradesman – Don’t Forget Liability Insurance!

  1. Jim says:

    A client of mine, a kitchen and bath remodeler hooked a line for an ice maker under the sink on a Saturday. When the homeowner came home on Sunday the first floor and basement were flooded from an improperly tightened fitting. Result: $90,000 claim. All paid by his general liability policy.

  2. FI Pilgrim says:

    A new client of mine actually negotiated a lower hourly rate based on the fact that I won’t have to carry liability insurance, so I’ll just be part time with his firm. I think it will work out much better that way!

  3. Pauline says:

    We need to set it up asap. Thankfully the risk is low and so should be premiums.

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