What Are Common Gaps in Trades Insurance

The Insurance Problems Many Tradies Only Discover After a Claim

Many businesses believe they are fully protected because they have an insurance policy in place.

However, the biggest issues often appear when a claim occurs. Some of the most Common gaps include:

Tools and Equipment Not Properly Covered

Many tradies rely heavily on tools to generate income.

A common issue is:

• Tools are not insured

• Tools are undervalued

• Tools are left in vehicles overnight

• The policy does not respond in certain circumstances

• High-value equipment is not specifically considered

Example:

A builder has $30,000 worth of tools stolen from a work vehicle.

However, the policy only provides limited or no cover for tools left in vehicles.

The business may experience a significant financial loss.

Lack of Hire Vehicle Cover

For many trades businesses, a ute or work van is essential.

If your vehicle is damaged and unavailable, the problem is not only the repair cost.

The bigger issue may be:

• Missed jobs

• Lost income

• Customer delays

A hire vehicle option may assist by providing access to a replacement vehicle while yours is being repaired.

Incorrect Turnover or Business Details

Insurance is based on the information provided.

Problems can arise if:

• Turnover has increased significantly

• Subcontractors are being used (and not declared)

• Business activities have expanded or not correctly listed

• Employees have increased

Insurance should grow with your business.

Subcontractor Disclosure Issues

Many trades businesses use subcontractors.

Important questions include:

• Are subcontractors listed/declared and insured?

• Are they employees or contractors?

• Are their activities disclosed?

• Do they have their own insurance

  
  

Incorrect information may create complications during a claim.

How Do Legislative and Regulatory Changes Affect Trades Insurance?

Your Insurance Needs Can Change as Your Industry Changes

Trades businesses operate in a highly regulated environment.

Insurance requirements can be influenced by:

• Licensing requirements

• Building regulations

• Workplace safety obligations

• Contract requirements

• Industry standards

Professional Indemnity Insurance

Some builders, consultants, designers, engineers, and professionals may require Professional Indemnity Insurance.

This can protect against claims alleging:

• Professional mistakes

• Advice errors

• Design issues

• Negligence

• Errors in emails, specs and reports

  
  

Workers Compensation Obligations

If you employ workers, you may have obligations depending on your state or territory.

Incorrect worker classification or failure to maintain appropriate cover can create serious issues.

Home Warranty Insurance

Certain residential building work may require mandatory warranty protection depending on legislation.

Workplace Health and Safety

Strong safety systems can help reduce:

• Workplace accidents

• Injuries

• Liability exposure

Risk management

Good risk management can also improve your overall insurance position and manage risk.

Failure to consider other insurances available to complete your program and better protect your business.

Every trade business is different, and the right insurance structure should be designed around how you actually operate — not just a standard policy.

For an obligation-free discussion or a confidential review of your existing insurance, speak with Arthur Hatzi, Principal and Insurance Specialist at Legion Insurance Brokers Australia.

With over 20 years’ experience in the insurance industry and a track record of helping businesses achieve better outcomes — from arranging cover through to supporting clients during claims — Arthur provides practical advice when it matters most.

📞 0416 171 274📧 arthur@liba.com.au🌐 www.liba.com.au

Disclaimer: General information only. Seek professional advice for your specific circumstances and insurance program, cover and arrangements.