Best for business: Top value insurance for tradesmen

Our 'Best for Business' series has already focused on the types of insurance you'll need if you work from home or run a small ‘white collar’ business, but what if you're a tradesman?

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To an extent, the level of cover you will need if you're an electrician, plumber, builder or work in any other kind of trade, will overlap the cover required for someone working from home or in an office. But there are also some variations – as we reveal below.

To ensure you get the right price for your cover, you can compare all of these insurance types through MoneySupermarket

The essentials

Whatever your trade, you'll find that business insurance policies will offer a number of core covers under one package. You can then add further options to provide more comprehensive cover specifically tailored to the needs of your line of work. Below are two essentials.

Public liability insurance

Although it's not a legal requirement, having public liability insurance is vitally important. In some cases, you may have to show you have this type of cover before being awarded a contract.

Public liability insurance means you'll be protected should a claim be made by a member of the public, such as a customer, if they are injured, or even die, as a direct result of your business.

It will also cover damage to property. So if, for example, a pipe leaks after you've completed a job, causing damage to a customer's home, your policy would cover the cost of compensation to the customer – including legal fees and medical costs.

The same would be true if the injury or damage caused by your business occurred at a later date. For example, if you install faulty wiring which causes a fire a month later.

Employer's liability insurance

If you have one or more employees, it's a legal requirement to have employer's liability insurance. That is unless you only employ family members, in which case you may not need it, but check first.

In all other cases, if you don't have this type of cover, you can be fined up to £2,500 a day. You can also be fined £1,000 if you have the cover but can't provide your certificate of insurance when asked. A copy of your certificate must be displayed where your employees can easily read it.

As an employer, you are responsible for your employees' health and safety while they are at work and, in some cases, when they are travelling on business. Should an employee be injured or fall ill due to their work, they may sue your business for compensation.

Employer's liability insurance will cover the cost of any successful compensation claims.

Even if you have this insurance, you will still be required to look after the health and safety needs of your employees. If a claim is made and your insurer can prove you have been negligent, it may refuse to pay out or sue you for any compensation payments it makes.

You should have at least £5million of employer's liability cover, but most policies provide a minimum of £10million. 

Added cover

Once you've got your essentials, you can choose from a number of additional options. Which ones you choose will depend on the type and size of your business.

Professional indemnity insurance

If your trade requires you to provide consultancy and advisory services or product designs, professional indemnity insurance will protect you in the event you make an error in your work and a client suffers a financial loss as a result.

Should the client file a claim against your business for compensation, your policy will cover these costs as well as legal fees – even if you feel your business was not at fault.

Without this cover, the price of meeting these costs by yourself could be high enough to cripple your business.
Some professional bodies – and some clients – require professional indemnity cover to be in place up to certain sums insured.

Buildings cover

Buildings cover will protect your business premises against risks such as fire, storm damage and flooding. In some cases, buildings insurance will also include business interruption insurance (also known as consequential loss cover) which will make up for any money you lose due to being unable to trade if your premises are seriously damaged.

It will also cover additional costs you have to pay to get your business back up and running.

Tools cover

No matter whether you have hand or power tools, replacing them out of your own pocket will be costly should they get stolen or damaged. Tools cover is therefore well worth adding to your policy which will usually offer 'new for old' cover so your tools are replaced by new equivalents.

If you leave any tools in a vehicle overnight, you should extend your insurance to cover this, although it will make your premiums more expensive.

Equipment cover

If you also have equipment in your business premises such as computers, laptops and phones, this type of insurance will ensure they are protected should they get lost or stolen. You may want to extend this cover so these items are also protected when off the premises.

But your policy may state they must not be left in a vehicle overnight.

You can also take out insurance for equipment that you've hired, known as hired-in cover.

Stock insurance

This will cover the cost of replacing any stock on your premises or in storage if it is damaged or stolen. The stock will be replaced at cost price, not the recommended retail price.

Plant insurance

You can also include plant insurance on your policy to protect against damage to the plant. You can choose between hired-in plant cover or own plant insurance.

Vehicle cover

If you have business vehicles, you may need a separate commercial vehicle insurance policy. If you have three or more vehicles it's sometimes cheaper to take out a motor fleet policy. As with a private car, a minimum level of third party cover is required by law.

Contract works

Should a project you're working on be damaged before it's finished, this type of cover will ensure the work you've done is repaired or you'll be paid the value of your work at the time of damage. Materials on site or in transit to the site will also be covered.

Finding the right price

No matter what your trade is, when applying for insurance, you'll want to get the best price possible. The only way to do that is to shop around and compare quotes from a wide range of insurers.

It's easy to do this with MoneySupermarket's comparison service, which, in partnership with Simply Business, will help you to find the right level of cover for your business at a great price. Remember to do this every time your insurance is up for renewal to ensure you always get the best deal.

For further tips, take a look at our business pages.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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