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What is The Right Amount of Insurance for a Tradesman?

Rhino Trade Insurance 20 August 2021

When you're in the market for tradesman insurance, it can be difficult to know exactly how much cover you want or need. Our policies give you different choices depending on the type of insurance. When signing up, you'll be asked whether you want to cover yourself up to £1 million, £2 million and even £5 million. But what's the right amount of insurance for you?

The lower the level of protection, the cheaper the premium, which is a crucial consideration for many tradesmen and small business owners. However, price should not be your only deciding factor. We recommend weighing up the risks associated with your line of work before settling on an appropriate level of cover when it comes to crucial business protection like public liability insurance. Here's what to consider:


Which level of cover is right? 

Ultimately, you must decide what is right for your business. However, we'll use public liability as an example to explain the areas that need to be addressed. To tradespeople, we offer public liability insurance covering £1 million, £2 million and £5 million. These levels might seem like an extraordinary amount of money, and you might be wondering how on earth you could make a mistake leading to such a significant payout. Unfortunately, in reality, if someone claims against your business, they often include things like medical bills, loss of earnings, and legal fees, on top of any damage. So, it gets expensive pretty quickly!

Without your liability insurance policy, your business will have to cover the costs of any claims. So, your decision should be based on the chance of a claim being made and any claim's potential size. In addition, you must consider your trade, what jobs you'll carry out, the tools you use and where you'll be working. Clients or customers may even require a certain amount of liability insurance to be in place before starting work.

Generally, there are three brackets for you to think about:

  • £1 million: Lower risk – this could be consultancy type services where your contact time with customers is limited.
  • £2 million: Medium risk – if your work directly impacts your clients and could lead to injury or loss following a mistake, it's better to increase your coverage. 
  • £5 million: Higher risk – if you work daily with clients in a high-risk activity that could cause harm to the public, opt for the highest coverage possible.


How to decide what's right for you? 

If you're struggling to decide on the appropriate level for your circumstances, reach out, and we'd be happy to discuss your options. We talk to tradespeople every day, and our friendly, UK-based team are available six days a week.

Alternatively, speak to friends in your local network and find out what levels of cover they've chosen. If you know someone in a similar industry with a business around the same size, that would be a great source of advice.

Another place to look for a tradesman is work contracts. You will find that some contracts will specify a level of insurance stipulated in the contract details. Local authorities, for example, usually only work with tradespeople with a minimum amount of public liability coverage, which is often £5 million. If there is a type of job you want to win, this could be a great place to start your research.


The verdict

There's no hard and fast rule to decide the right amount of insurance tradesmen need. Use the information here to consider what's the most important factors for your circumstances. Insurances like public liability are vitally important for tradespeople and small business owners, but it's not a legal requirement.

If you have any questions, our team are ready to answer them! So call us today on 0116 243 7904 or fill out our contact form.

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