A Tradies Guide to Business Insurance

There is enough to worry about when running your business day to day let alone having to consider everything else that comes with the job like Tradies business insurance. From payroll and chasing debtors, it can feel like there are a million things to do and you’re the only one who can do it.

We are in the business of providing Tradies with useful pieces of information to help their business get moving.  One of those useful bits of information is Tradies business insurance. So, today we are going to help you understand some of the insurance products out there and what they can do for you as a Tradie. We are going to cover off 7 of the key insurance products available and what they are designed to help with.

 

Public Liability Insurance

This is one of the most common business insurances going around. Public Liability Insurance covers you if negligence or breach of duty results in personal injury of property damage to a third party.

You will find a lot of the time it will be mandatory to get your trades licence however it is always good to consider given the exposure you have while on the job.

Public Liability is not to be confused with in the event where say an employee of yours sustains an injury as that would need to be covered by your workers compensation insurance.

So how much public liability insurance is the right amount?

It depends on the size of your contract as some contracts require a certain level of protection.  However, the minimum amount of cover is $5 million.  Experts at TradeRisk have calculated a percentage breakdown of the level over cover Tradies opt for in Australia.

 

Tool Insurance

What is a Tradie without their tools?

Tool insurance can cover the costs if your tools are stolen and you need to replace them. The sad reality is, if you have good tools someone may consider flogging them and it happens more often that you would think.

Tool Insurance can be bought in conjunction with some other products however there are also stand alone policies available.

TradeRisk advise your typical tool insurance policy will cover;

  1. Fire damage
  2. Storm Damage
  3. Damage in a motor accident
  4. Theft of tools

 

Workers Compensation Insurance

It goes without saying Workers Compensation Insurance is incredibly important when you are running your own business.

Workers Compensation is an insurance payment made to an employee if they get sick or injured due to their work. It generally covers wages while they are not fit for work plus medical expenses and rehabilitation.

Workers Compensation is heavily regulated given the nature of the product and driven mostly by the state that you operate in. For more information on how your state operates and who provides workers compensation insurance, the fair work website has a list of the state based regulators.

 

Professional Indemnity Insurance

Professional Indemnity Insurance is a specialised product designed if you provide advice to your clients as a service. Professional Indemnity Insurance is designed to protect you if you have a claim made against you by a client because they have suffered some form of financial loss due to an error or omission you made during the course of your work.

It can be quite a complex product so exactly who needs it can be tough. Depending on what you do for work, sometimes it will be a minimum requirement to hold an active policy to have your trade licence or professional association membership. For example, Building Surveyors & Certifiers must have it to operate in all states of Australia.

So, what is the difference between professional indemnity and public liability?

Experts at Professional Indemnity Insurance have provided straight forward explanation of the differences of both policies.

 

Personal Accident Insurance

When you are a Tradie, being self-employed can bring great freedom but if you are unable to work due to an illness or injury it can be a very stressful time.

Personal Accident Insurance can cover some of your lost earnings while you are off the tools until you can get back on your feet.

 

Motor Vehicle Insurance

 If you have any Ute’s or Van’s on the road you need to make sure you have motor vehicle insurance that covers your vehicles why they are being used for work. It covers things like, accidental damage and theft.

If you hire a ute from TradieSpec, our vehicles already have insurance factored into the total cost so that’s one less thing you need to worry about.

 

Contract Works Insurance

If you are entering into a contract to complete work, you may also need to consider Contract Works Insurance. It is designed to cover you for a range of other risks including those you have no control over.  Required most often by builders to cover risks such as loss or damage to your project due to fire, storm, or other events.

Sometimes, it may even stipulate in the contact you must have Contract Works Insurance as part of the agreement.

 

Wrap up

Insurance can be a tough area to navigate. We wrote this article to highlight and raise awareness around some of the Tradies business insurance products available however we are not insurance experts. So, before you do anything, speak to a licenced and qualified insurance professional.

Many of these policies are essential before even starting work so we suggest contacting the team at Professional Indemnity Insurance and TradeRisk for key advice on your policies.

 

So You Had An Accident In Your Tradie Vehicle, Now What?

Being involved in a car accident is never a pleasant experience, especially if you are one of the 1.1 million tradies in Australia that rely on their ute to make a living each week.

For a tradie, having your ute, van or truck off the road for repairs can have serious financial consequences.

Knowing what to do after an accident and during the repair process can save you a world of headaches and keep costs to a minimum.

So, You’ve Been Involved In An Accident… Now What?

First off, remain calm. Accidents happen and losing your cool about the damage to your new Toyota Hilux is not going to help the situation. Take a deep breath, count to ten and try to remain as calm as possible.

Now it is time to assess the situation. Are you hurt? Are your passengers hurt? Are the people in the other vehicles hurt? Call 000 if necessary and provide assistance to others if it is safe to do so.

If the accident was minor and the vehicles involved are still drivable, consider moving to a safer location away from the flow of traffic. Think side streets, nearby carparks or driveways so you can focus on recording the details of the parties involved and how the accident occurred.

If your vehicle has sustained serious damage and is no longer drivable it will need to be towed from the accident scene. If you are in a major city, local towing operators may already be aware of the accident and are on their way to assist. If the accident occurred after hours or in a remote location, call 000 or research local towing companies and contact them for help.

PRO TIP: You have the right to choose which towing company you use to transport your vehicle and do not have to use the first company to arrive on the scene.

Recording Accident Details And The Drivers Involved.

This is where it pays to take your time!

After an accident, many drivers make mistakes and forget to record key pieces of information. Names, contact numbers and vehicle registrations are the most obvious details to record yet are often the most common which people forget to write down.

Forgetting to record certain pieces of information may result in you having out of pocked expenses with your insurer. Take it slow and get it right!

Key details to record about the accident are:

  1. Drivers names
  2. Addresses
  3. Contact Numbers
  4. Vehicle Registrations
  5. Insurance Information
  6. Time, Date and location of the accident as well as a detailed description of how the accident occurred.

If any of the parties involved refuse to provide their details, contact the police immediately.

Independent witnesses can provide valuable, impartial insights into what happened in the accident. Ask independent witnesses who saw the accident to provide their name and contact information. They can be contacted by your insurer if required.

PRO TIP: A picture is worth a thousand words. Take as many photos of the accident scene as possible in addition to the party’s drivers’ licence and vehicle registrations.

Accessing A Tradie Replacement Vehicle

If your tradie work vehicle has been damaged, you are going to need a suitable replacement while your vehicle is in for repairs. This is where TradieSpec come into play. As the only 100% tradie dedicated replacement vehicle provider in Australia, you can guarantee that we have your back.

Your Rights As A “Not At Fault” Driver. In Australia, not only is the “At Fault” party in an accident liable to cover the cost of your repairs, they are also liable to cover the cost of your replacement vehicle while yours is off the road!

How Long Can You Have A TradieSpec Replacement Vehicle? You are entitled to a TradieSpec replacement vehicle for the period of time that your vehicle is off the road or until the date you receive settlement for the total loss of your vehicle.

I am “At Fault”. Can I Still Access A TradieSpec Replacement Vehicle? If you were deemed the At Fault driver in the accident TradieSpec can still help you get back on the road. If you selected the “Hire car” option on your insurance policy, you may be entitled to claim the cost of a tradie replacement vehicle through your insurer or you can direct hire from us at our competitive daily rates.  

PRO TIP: Contact TradieSpec before speaking with your insurer for the best, obligation free information regarding a tradie replacement vehicle. We will be happy to provide any advice we can.

Repairing Your Tradie Vehicle

So, your tradie work vehicle is damaged and you need to get it fixed! The quality of repairs you receive can vary greatly from one repairer to another, so it is important to choose who repairs your vehicle wisely.

If you do not have a repairer in mind TradieSpec can recommend smash repairers in your local area which provide high quality repairs and have outstanding customer service.

Third Party Claims: If you were “Not At Fault” in the accident you have the option to go through the “At Fault” driver’s insurance company if they have lodged a claim. This option guarantees you the right to choose your own repairer which may not be available under your own policy. Contact the “At Fault” driver and ask them to provide their insurer and claim information and contact your local smash repairer of choice.

Going Through You Own Insurer: If you were “At Fault” in the accident or you choose to have your vehicle repaired through your own insurance company, you will be required to lodge your own insurance claim. Depending on the specifics of your policy, you may not have the option to choose where your tradie vehicle is repaired. Read the terms and conditions of your policy and see where you are entitle to have your vehicle repaired.

PRO TIP: If you only carry third party property insurance on your tradie vehicle and were involved in a Not At Fault accident with an uninsured driver, your own insurance policy may still cover repairs to your vehicle up to a fixed amount. Check your product disclosure statement from your insurer for specifics in this area.

How Can You Be Better Prepared?

Many tradies would not have considered how losing access to their work vehicle would impact their business. So you are better prepared in the unfortunate event of an accident some steps we recommend are:

Ensure you have “Hire Car” on your policy: If you rely on your tradie vehicle for work, you should have the hire car option selected. This is a no brainer! Having the “Hire car” option selected will guarantee you have access to a vehicle when yours is off the road.

Speak with a broker: Insurance brokers work for you and your businesses to ensure you have the appropriate coverage and get the best deal. Brokers can save you time and money on your comprehensive policy with favourable terms and conditions such as “Choice of repairer” and “Hire car” following an accident.

 Switching Insurers: If you do not go through a broker, be diligent in shopping around for the best deal on your comprehensive car insurance. Many insurers offer introductory deals to entice new customers and then gradually alter the coverage over time. Shopping around each year ensures you always get the best deal and can save you and your business hundreds of dollars.

Wrap Up

If you have been involved in an accident and are still unsure what to do please feel free to contact the TradieSpec Team on 9533-2393. Our staff are always happy to provide obligation free advise and guide you in the right direction.

Should I buy, lease or rent my work Ute?

There are so many variables to consider when you start looking for a new work Ute, not just the make and model.  Your work Ute is often the largest purchase your business will make and it’s the most important purchase your business will make.  Your work Ute is your shop front. It’s the first thing your clients see as you or your employee pull into the driveway.  So, a relatively new model of  work Ute that is kept clean and presentable will do wonders for your brand.

Naturally the first consideration is your budget.  Basic tray and tub-back Toyota Hilux’s range from $27,000 for a base model single cab tray back Ute.  All the way up to a top of the range Toyota Hilux SR5 Rogue at $62,000.

Then comes the additional spec, toolboxes, tow bar, ladder racks, roof racks, squarker.  You name it, you can spec it on your vehicle these days.  However, all these come at additional costs.

But new Ute’s are expensive, and a fleet of new Ute’s is a huge expense on the business every month.  It’s important to carefully consider your situation, run the numbers on maintenance and servicing before you decide.  We have broken down some of the factors you should consider for each option:

  1. Buying (outright purchase)

Often considered the ‘safe’ option.  But is it really?  If you are running a trade business, then managing your cashflow is extremely important.  Outlaying $30K to $50K on a brand-new work Ute upfront can significantly dent your cash reserves.

Trade Spec Toyota Hilux Work Ute
A single cab 4×2 2.7L petrol Toyota Hilux tray back with Trade Spec’s

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

So, let’s look at some of the advantages and disadvantages of buying:

Advantages

  • Avoid the financial debt burden.
  • You have the option to purchase a secondhand work Ute from private seller.
  • Negotiate the price on the Ute with the dealer as hard as you want.
  • Claim the yearly depreciation as a business expense.
  • Claim the Asset instant tax write-off as a GST credit on assets up to $30,000.

It’s important to consider the cashflow of your business and the financial position which your accountant can help with.

Disadvantages

  • The Ute will require care as to not depreciate the value faster than normal.
  • A Toyota Hilux’s value will depreciate by 60% in 5 years at 30,000km travel per year. That’s $292 per month.
  • Manage the yearly registration, insurance and maintenance costs yourself.
  • Plans for new staff? Significant cash outlay for each new employee Ute.
  1. Finance Loan 

Financing a Ute also known as a Chattel Mortgage has held a bad reputation for some time.  However, interest rates have fallen from above 17% to below 1% in Australia in the last 20 years making finance a lot more affordable for everyone. The interest paid over a 5-year chattel mortgage on a $30,000 Ute varies between $800 and $1,200 per year.

Financing a Ute carries a range of advantages and disadvantages.

Advantages

  • Amortise the cost of the Ute. This basically means to write-down the initial cost of the Ute over a period. Big tick for saving cashflow.
  • You are still the registered owner over the Ute so you can claim yearly depreciation as a business expense.
  • Claim the asset instant tax write-off as a GST credit on assets up to $30,000.
  • The option to sell the Ute for a profit after the loan is paid out, or during if warranted.
  • No upfront cash outlay for new Ute’s for staff

Amortisation is a business’s best friend when carefully planned and implemented.

Disadvantages

  • The same depreciation liability as an outright purchase applies in this instance.
  • Paying interest on the Loan means you will pay more than the initial value of the Ute over the life of the loan.
  • The burden of a finance requires careful planning in a business.
  • Requires credit approval check which restrictions have tightened on.
  1. Lease 

Operating lease options are structured in a similar way to a loan in that you make monthly payments however you don’t own the Ute.  You may be restricted to the lease companies’ dealer network for Ute selection however, the lease company may have the advantage of buying power when it comes to negotiating Ute price.  Again, the pro’s and con’s need to be weighed up separately.

Advantages

  • Continue upgrading the Ute when lease ends.
  • Lease companies will usually give you the option of lumping the cost of insurance, servicing, registration, tolls and fuel into one easy to manage monthly payment.
  • No initial cash outlay to obtain new model Ute.
  • You don’t carry the liability of a depreciating asset as you hand the Ute back at the end of the lease.

 Disadvantages

  • It can cost just as much as a loan over the lease period.
  • You don’t own the asset therefore don’t have the option of selling the Ute for profit after.
  • You may be restricted by the lease contract when making changes to the Ute.
  • After June 30, 2020, you will be required to declare the operating lease on your balance sheet just like a loan.
  • You will likely still require a credit approval check to obtain a lease.
  • You are locked into making repayments for the life of the lease.
  1. Renting

A new concept gaining momentum and interest with Trade business owners. Traditionally, a rental Ute was not part of the equation for business owners because of the cost of renting a Ute.  However, with new Ute rentals available structured specifically for three to 12 month periods, it’s given Tradies another option to consider.

Many new business startups are restricted by the startup capital they have available to them and may not be able to apply for a lease on a Ute.  More established businesses may be bringing on new staff and don’t want the commitment of purchasing or leasing a Ute over the long term until the new staff member has completed probation.

With TradieSpec, rental rates range anywhere from $231 per week for a 12 month rental all the way up to $301 on a 3 month rental. This price includes all on-road costs as well as roadside assist.  However, with short-term commercial rental companies you can be charged anywhere from $567 per week to $700 per week for a Ute.

Advantages

  • Shorter contract periods give you the flexibility of returning the Ute when you are finished with it.
  • Flexible option for a new business starter who can’t get finance on a new Ute.
  • Far less risk for the business for a new employee on probation for 3-6 months who require a Ute.
  • All the insurance, servicing and registration costs are covered in the weekly payment as well as roadside assist.
  • Spec the Ute to your requirements.
  • Replacement Ute’s with the same spec available if you have an accident. (link to TradieSpec Now page)

Disadvantages

  • Cost per day is slightly more expensive than lease or finance as you are paying for the flexibility.
  • Can’t make changes to the Ute unless approved by rental company.

Whatever you choose, the option needs to be the right fit for you and your business.  It’s important to sit down and run the numbers for your business also to seek advice from your accountant.

It’s always worthwhile inquiring with different companies to find out what options they have available before deciding.