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Insurance guide for self-employed tradies

Being a tradie is all about the hard yards. The last thing you need is to have to deal with other distractions – like stolen tools, time off work due to injury, or (touch wood) a lawsuit.

We know you’re good at your job. But hey, it happens.

This is where insurance comes in. A good insurance policy makes sure you’re covered if any (or if you’re unlucky, all) of these things happen to you. It’s a surefire way to avoid financial stress and focus solely on the work.

But not all insurance is made equal, and different policies cover different things – it’s not a one-size-fits-all deal. What you ultimately opt for will depend on your business needs, and how you operate.

So to help you make an informed decision, here’s a quick rundown on the types of insurance tradies might need to think about.

Better safe than sorry!

A quick note about the Accident Compensation Corporation (ACC)

When working in New Zealand, it’s handy to have an understanding of how ACC works. It’s a comprehensive, no-fault personal injury cover system for all New Zealand residents and visitors.

Unlike other countries where you might sue for personal injury, ACC provides financial support for those injured in accidents, covering everything from medical bills to rehabilitation costs and offering income compensation for time off work.

Moral of the story: While you can’t sue for personal injuries in most scenarios, you can rely on ACC to back you up financially. For tradies, this means some peace of mind, knowing that their ACC levies help cover any work-related mishaps.

While the ACC provides basic cover, sole traders can also opt for ACC CoverPlus Extra. It lets you agree on a specific amount for lost earnings compensation beforehand, so there’s more clarity if an injury happens.

But if you’re really worried, you could always opt for Income Protection insurance, or Private Health insurance, just in case.

Accident Compensation Corporation (ACC)

Public Liability insurance

Public Liability insurance covers any negative impacts your work might have on your client, their property, or the general public.

For example, let’s say you’re a builder, and one of your subcontractors fails to properly secure a crossbeam on your building site. If that beam accidentally falls and injures your client, or another member of the public, your costs are covered should they decide to take legal action.

Public Liability insurance is provided in cover levels of $500k, $1m, $2m, $5m etc, and the level of cover you require will determine the cost of the policy. If there’s a chance your work will result in some serious accidental damage, a higher level of cover might be a good idea.

Personal Accident insurance

Despite the presence of ACC, Personal Accident insurance is still available in Aotearoa. While ACC provides no-fault personal injury cover for all New Zealand residents and visitors, there are some gaps and limitations in ACC’s coverage.

For instance:

  • ACC only covers accidents and not illnesses.
  • ACC compensation might not fully replace lost income, especially for those earning above the capped limit.
  • ACC may not cover all rehabilitation or other associated costs.

This is where Personal Accident insurance can take the heat off your business, and give you the space you need to recover. A good Personal Accident insurance policy can cover an agreed upon percentage of your income, as well as the cost of medical treatment related to your accident or injury, if not fully covered already.

Some insurers include illness as well as injury in their Personal Accident policy, meaning you don’t have to take out a separate Income Protection policy for if you get sick.

Make sure you’re clear on what you need, and what your policy of choice covers, before you sign the dotted line.

Tools and Portable Equipment insurance

Where would anyone be without their tools of the trade? Broke, probably.

Which is why it’s always devastating when tools are stolen from a home, site, or even a ute. That’s why Tools and Equipment insurance is so important – no matter the current state of your cash flow, you know you’ll always be able to afford to replace your gear.

Once again, different policies cover different things. Some may need an itemised list of all the tools and equipment you may need to claim on. Many have rules around proving ownership, as well as requirements around the theft – for example, theft of a tool box from a ute that was broken into may be covered, while a tool box stolen from a tray might not.

(If you’re worried about the latter, you can opt for an “open air” policy, but this may be more expensive.)

Basically, you know your needs best. You’ll need to decide on the type and level of protection that’s right for you.

Commercial Vehicle insurance

If your business vehicle is stolen, or meets with an accident, or is set on fire (anything is possible!), you may need a good vehicle insurance policy to compensate.

This is probably one of the most common types of insurance that exists, and you should be able to find the right level of cover for you pretty easily.

Do your own research, or go through a broker – but don’t skimp on what you might one day need to stay in business!

Commercial Vehicle Insurance

Other types of insurance

While the above covers the bulk of what you need, there are a few other bits and bobs you might want to consider. So here’s the quickfire round:

Professional Indemnity Insurance

When you’re working for clients, you may be making decisions, delivering services, or creating things that can have a significant impact on your clients’ businesses. Should you be identified as the cause of a significant negative impact to another business, you might be held liable.

Professional Indemnity insurance covers the court costs in this situation. It’s not necessary for everyone, but definitely check it out if it’s relevant to your work.

Income Protection Insurance

If you have to stop working for a reason not covered by Personal Accident insurance, Income Protection insurance has your back. Make sure you understand what you’re covered for though – you don’t want to stop working and then be caught short.

Private Health Insurance

It can help with the costs of treatment at a private hospital, or cover things not covered by ACC.

Join Hnry today

Where Hnry comes into all this

We help you sort out all your tax stuff for you, which is another distraction you can live without.

For just 1% + GST of your self-employed income, capped at $1,500+GST a year, Hnry will calculate and pay all your taxes, levies and whatnot for you, including:

We can also handle things like:

  • Quotes
  • Invoices
  • Invoice chasing (politely of course. Get paid 8 days faster than the industry average!)
  • Scheduling invoices
  • Raising expenses
  • Managing expensing

And we automatically complete and lodge your tax returns for you. Basically, we become your accountant. And you’ll never have to think about tax again!

DISCLAIMER: The information on our website is for general educational purposes only. It doesn't cover all situations and circumstances, and shouldn't be taken as direct tax advice. If you're looking for specific help with your taxes, join Hnry and our team of experts can provide you with assistance tailored to your business needs.

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