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3 Financial Risks Tradespeople Face (and How to Protect Against This)

Tyler Vogelsberg • Oct 16, 2019

Have you just started as an electrician, plumber, builder or a specialist in any other manual trade? If so, protect yourself against financial losses right from the beginning. The trade industry is fraught with risks, and any one of them could leave your business bankrupt if you don't protect yourself against them.

To ensure you can cope with whatever comes your way, take a look at these common financial risks tradespeople face and how to cover yourself against those losses.

1. Tool Theft

A tradesperson is nothing without their tools, so ensure they’re protected. The average person has little use for specialist trade tools, so many tradespeople think their tools aren’t at risk of theft. Unfortunately, that couldn't be further from the truth.

In 2017, one concrete contractor in Melbourne lost a staggering $400,000 worth of tools to theft. While thieves may not have a use for your tools themselves, the high value makes them a resale goldmine.

What's worse is that having your tools stolen means you’ll also lose money for every day that you can’t work, because you don't have the equipment.

Thankfully, you can prevent tool-related financial losses, with tool insurance.

2. Damage to Clients and Their Homes

Manual trades are hazardous. One wrong move or small mistake can cause serious damage to a client's property, or even bring harm to clients themselves. Accidentally dropping a heavy hammer, for example, may smash a client's floorboards. Or, an improperly fitted light fixture could come loose and fall onto a client or lead to an electric shock.

No matter how well trained you are and how infrequently you make mistakes, there is always a risk that something could go wrong—especially if you have employees working under you too. Plus, if anything goes wrong and affects a customer, you'll likely be the one who pays the medical bills or repair costs. If you can't, you'll quickly find yourself caught up in a court case and face irreparable reputation damage that may cripple your business.

With Public Liability insurance, however, you can rest assured. This cover will pay out the legal fees and compensation you're faced with if you or your employees are negligent causing harm and/or damage during the process of your work. This type of insurance is so crucial, that many professional trade bodies require their members to have it.

3. Motor Vehicle Cover

Could your business survive without your motor vehicle, van or truck? Without a vehicle, you have no way of getting yourself, your tools and your employees where they need to be. Without any protection, something as simple as a motor vehicle accident could leave your business out of action for weeks, costing you thousands in missed work.

On top of that, you may have a lot of angry customers who waited on your services, leading to terrible reviews that could affect your future earning potential.

Again, this is where insurance will save you. Comprehensive motor vehicle insurance will provide cover to repair your motor vehicle in the event of an accident. It will also cover any damages caused to third parties if you are at fault in an accident. You can also take out additional cover for a Hire Car to keep your business running whilst your main vehicle is at the repair shop.

If you’re concerned about the complexity of covering yourself against so many different financial risks, don't be. At Westralian Insurance, we provide special insurance packages for tradespeople that cover you against all of the above claims and more. For a simple, cost-effective, complete solution for your business, submit an enquiry now, or call (08) 9302 1388.

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