What insurance do plumbers need? This is a question we get asked all the time after dealing with hundreds of plumbers Australia-wide.
It gets very confusing when you are looking through online forums, getting quotes online and talking to people in the industry and noone can give you definitive answer on what insurance policies you should have and what’s an absolute must.
The truth is a lot of insurance conversations get lost in translation. Before we dive into some general information we want to recommend that should you need specific information about your business then speak with a broker. This is the only definitive way to find out exactly what insurance you need.
Now that we’ve gotten that out of the way, we are going to dive right in and build the plumbers insurance handbook.
Do plumbers need insurance?
Let’s check this one off the list first. We all know those businesses and sub-contractors that don’t have any insurance. Whether they don’t believe in it, they think its over-priced or they think that they don’t need it. If you are starting a business or you currently run a business and are considering this route, we recommend avoiding this at all costs.
The plumbing industry over the last couple of years plumbers have been one of the trades with the highest amount of claims in all of the construction industry. This is for both the frequency of claims being made and the costs of damages that have been claimed.
So if you think that you can you can run your business without insurance, it could come to an end very quickly if a claim was made against you.
What insurance should plumbers have?
There are a couple of key policies that we recommend plumbers have. Some can be dependent on the type of work that you are doing however, in order of importance we recommend the following insurance for generic plumbing contractors: Public Liability Insurance This is usually the most important policy that a plumber needs. If you are in Victoria, you can’t obtain or renew your plumbing license without having this policy in place. Victorian plumbers also require a specific endorsement to be applied to their public liability insurance so it’s important that if you are applying for your license in Victoria then make sure your policy complies with the VBA requirements. Public Liability insurance for plumbers covers your negligent acts against personal injury and property damage. This could be something as minor as carrying a ladder into a customers house and putting a hole in the wall to installing a pipe that’s not fitted correctly that bursts behind a wall and floods a house. As you can see, this type of policy is quite important to have in place and can protect you from some large loss claims. Who is the best public liability insurance for plumbers? This needs to be considered on a case by case basis as the type of work that you do needs to be considered in the type of policy that you have and the insurer that you place your cover with. For example a civil plumbing company would not have the same insurance a domestic or residential plumber. The same can be said for a gas fitter and roofing plumber. An overall general consensus of who is the best public liability insurance for plumbers in our opinion based off current cover at the time of writing this post would be Hollard Commercial Insurance. This is for domestic and commercial plumbers everywhere other than Victoria only and plumbers taking on light commercial work under $100,000 in contract value. If you are based in Victoria, a close second would be AIG. Why is Hollard Commercial the best public liability insurance provider for plumbers? There are 3 key components that we think really sets Hollard apart from the competition and these are:- They offer a 30 metre height limit instead of most other insurers offering a 10 or 15 metre restriction. We understand that jobs come and go and the last thing that you’re thinking of is the restrictions applicable on your policy on a 2 storey home compared to a 3 storey or commercial premises. The broader cover is our preferred option so that you can focus on running your business.
- Excavation work covered up to 5 metres. I know what you’re thinking, what plumber needs to dig 5 metres or more. We think this is very beneficial as once again it gives your broader cover but it also doesn’t apply a weakening of support exclusion which limits the cover provided to the surrounding properties. To read more about the effects of cheap public liability insurance, we have written a seperate article which outlines removal and weakening of support exclusions being placed on excavation risks.
- Affordability. We specifically put this option last although price is usually one of the most important factors but we put this last specifically because we know what you’re thinking – broader cover means you pay more money. In this instance, wrong! Hollard continually come in as one of the most affordable insurance providers for plumbers.
As the market continues to harden for plumbers insurance policies, the more specific information that is required will ensure that you have a suitable insurer covering you that understands the work that you are doing. The worst thing that you can do is try and provide no information at all, expect the cheapest premium, and then expect the best claims service if and when a claim occurs.
Professional Indemnity Insurance
Professional indemnity insurance for tradies can be a bit touch and go as most trade contractors don’t think they need it in any capacity. In some circumstances, you do and should have this in place. A plumbers PI insurance will usually be required if you are issuing compliance certificates or doing an inspection and providing a report.
If you go to a job and recommend the appropriate way to fix the issue and then go on to write out a quote for the works, this is not triggering a professional indemnity risk. If this is all you are doing then no, you most likely don’t need professional indemnity insurance.
If however, you go to a customers house an inspect the property and its pipe work and charge a fee for the supply of a report to the customer on your findings then yes, you should have professional indemnity insurance in place.
The same can be considered for customers issuing water compliance certificates and gas compliance certificates.
Why do plumbers need professional indemnity insurance?
PI insurance has a broad definition of providing cover for any financial loss which is caused by your negligent acts. This can be for advice that you provide, or fail to provide. It could also be in situations where you have issued a compliance certificate and it was then later found that the installation didn’t comply with code regulations.
It is also good practice to have this in place as personal injury or property damage needs to occur for public liability insurance however PI insurance only requires a financial loss to occur.
Portable Tools Insurnace
Along with most other trade occupations plumbers invest a large amount of money in getting set up with a suitable fit out of tools to run your business. When you’re carrying around thousands of dollars of equipment at any one time this increases your risk of theft and also damaging these items should your vehicle be involved in an accident.
A common misconception is that your motor vehicle insurance will cover your tools if you’re in a car accident. This incorrect, some policies may offer a $500 limit for tools and thats about it. This also depends on your cover, if you have a private motor policy and not a commercial motor insurance policy then it will likely have an exclusion for tools of trade.
Tools insurance can be insured in two ways:
- A breakdown of the work that you are doing. For example, a % split between residential/commercial, whether you are doing mainly renovation work or new construction
- Whether you have current contracts in place with head contractors for specific jobs
- Your expected annual turnover
- An approximate estimate of annual payments being made to sub-contractors
- How long you have been in the industry for
- Whether you have made any claims
- Whether you work on any high risk sites such as airports, mining and power plant facilities.
- Whether you are doing any civil construction type works
- Unspecified tools cover will cover a dollar value that is set (for example $10,000) and only cover up to $3,000 per individual item.
- Speficied tools cover is required for any items that are over $3,000 in individual value.
What other insurance do plumbers need?
The other policies that plumbers generally need are all quite self explanatory and consist of the following:- Motor vehicles policy
- Trailer insurance
- Personal accident and sickness