The ins and outs of insurance can be confusing for anyone. As with any contract they have to cover a lot of different situations, which means they can be long and difficult to grasp in simple terms. This especially true for liability cover, as events can be incredibly complex. We’ve put together a brief explanation of most of the common policies tradies should have, or need to be aware of. Use our checklist to identify what you do have and what you don’t, then figure out if you’re missing anything.
PROTECT YOUR ASSETS WITH…
Covers loss of, or damage to, property that’s being built or altered from things such as fire, flood, theft, vandalism and natural disaster. It’s sometimes known as “builders risk” or “contractors all risk” insurance. For alterations and additions it’s the building owner that would normally arrange the contract works insurance. This is to ensure they notify the building’s current insurer that work is being done (not doing so could void their cover).
In July burglars broke in to a closed in new build in Nelson and stole the newly delivered appliances.
Protect your business vehicles anywhere in New Zealand. Full Cover, Third Party Only and Third Party, Fire & Theft options. Include trailers, as these are considered vehicles for the purposes of insurance.
Windscreen & glass claims are typically covered with no excess. Simply take your policy number in to a reputable windscreen repairer.
Protect your tools, equipment and other assets such as office contents, mobile phones, scaffolding and stock anywhere in New Zealand. Insured for their replacement value. Make sure trailers are included under your commercial vehicle insurance.
In November a builder lost $30,000 of tools when thieves broke into a site in Queenstown. Theft from vehicles is also very common.
Protect your assets such as buildings, materials and machinery.
An Auckland builder’s workshop was severely damaged in a fire caused by an electrical fault in a nearby property.
PROTECT YOURSELF FROM LIABILITY WITH…
This provides protection from your liability for damage to or loss of another person’s property, and in some cases injury. Cover for defending license complaints is automatically included in Builtin’s policy.
- Faulty Workmanship Extension: Covers damage caused by faulty workmanship. This is excluded from some public liability policies, although resultant damage is covered.
- Professional Liability Extension: Covers damage arising from professional advice or services provided by the contractor. This is an exclusion in many public liability policies, but can be a source of claims by tradies who are giving advice to homeowners.
A plumber’s apprentice failed to tighten a joint, causing water damage to the customer’s floor.
Provides cover for your liability to an employee for injury or illness that is not covered by ACC. Includes legal costs.
Covers legal costs and fines for breaches of statute, such as the Resource Management Act, Building Act, Fair Trading Act, and the Consumer Guarantees Act. Health & Safety at Work legislation make it illegal to insure for health & safety fines, however cover will include legal defense costs.
A Christchurch builder was prosecuted when one of his workers slipped & fell from an unprotected second floor balcony.
Provides cover for legal costs & damages if you, your subcontractors or employees, are accused of causing someone a financial loss as a result of a mistake or error.
A Hamilton builder relied on their surveyor to mark out a new site. After the contract was completed it was discovered that the house had been built too close to the boundary. The surveyor’s liability was limited by the terms of the contract, so the builder was deemed responsible for the cost to fix the error.
Provides cover for legal costs, fines and penalties resulting from a complaint made to the Building Practitioners Board. Includes cover for the liability arising from errors in records or work/memoranda. Also provides protection to individual LBPs for liability arising from signing off work of non-LBPs.
Provides protection for directors and officers for wrongful acts committed in their role as a director or officer of a company, including health & safety breaches and trading while insolvent. Cover includes legal defense costs.
PROTECT YOURSELF FROM FINANCIAL TROUBLE WITH…
Pays 75% of the money owed to a subcontractor if their main contractor goes into liquidation, insolvency or bankruptcy and is unable to pay outstanding invoices.
In 2013 Mainzeal Construction collapsed, costing subcontractors collectively millions of dollars. Building company collapses and developer liquidations are common and cost subcontractors millions of dollars every year.
Head contractors can comply with their Construction Contracts Act obligations by providing a bond to cover the retentions they hold from subcontractors. This also protects directors from their on trust liability, which if breached can result in substantial penalties.
Covers fixed expenses and replaces lost profits from an event that interrupts the operation of the business, such as a fire, flood or earthquake.
If someone critical to the business is unable to work this will cover the cost of a temporary replacement, so that business’ operations aren’t affected.
PROTECT YOURSELF AND YOUR FAMILY WITH…
ACC only covers accidental injury, not illness. Income protection/loss of earnings insurance covers you if you can’t work due to either illness or accident. It will provide payments in addition to ACC, or for events that are not covered by ACC. Taking income protection insurance in combination with dialling down your ACC payments can substantially broaden your cover for a similar total cost. Add specific injury benefit cover to receive an immediate lump sum payment for certain injuries.
In 2014 Reece, a 38 year old builder, suffered a heart attack while on site. He was able to focus on getting well without having to worry about where the money would come from.
Will you and your family be able to maintain your lifestyle and cover your costs if a serious health issue arises? This cover pays a lump sum in the event of certain serious illnesses or upon death.
In 2016 builder John “Cocksy” Cocks was diagnosed with terminal cancer. Being insured has meant he can focus on spending quality time with his family, setting them up for the future and ticking off his bucket list.
In July a Southland electrician was diagnosed with prostate cancer. While some patients wait up to five months for treatment in the public health system (Southern DHB had the longest average waiting time of 191 days) Tim’s treatment began immediately under his health insurance.
PROTECT YOURSELF FROM OTHER RISKS SUCH AS…
Malware, ransomware and hacking are now more common than burglary, and cost New Zealand businesses more than $250m every year. Builders are a particular target because of the high value of customer payments. Cyber insurance will help you deal with an attack as it happens, so you can get back to work quickly. It’ll also cover costs and losses you incur.
In 2016 three people lost more than $25,000 after their builders’ email invoices were hacked, instructing them to redirect payment to the fraudster’s bank account.
This protects your customer’s financial investment in their building project in case anything unexpected happens and you’re unable to complete the job. The insurer also guarantees to fix defects for 10 years, so that the customer is not out of pocket if there’s a problem in the future. Some guarantees also feature a waiver, which protects the builder from having to bear the costs of repairing defects that are covered by the guarantee.
Protect stock, prefabricated components and transportable buildings while they are being delivered.
If there’s a particular risk you’re concerned about or policy that you need let us know.