Declined. Not Covered. These are not the words you want to hear when something has gone wrong and you need to rely on insurance to help out.
But if you have not regularly reviewed your risk profile and insurance requirements, notified your insurer of changes to your operations or taken the time to understand what your policies do and don’t cover then you run the risk of a real shock when it comes to claim time.
Managing risk is a key part of running a business. This is true whether you are a large construction firm with nationwide operations, an independent contractor doing decks and fences or anywhere in between.
Insurance is a key part of your risk management plan, so it’s important to make sure you regularly check that what you have in place is suitable and make any changes that are needed.
If you use an insurance broker part of their service should be to assist you with this review each year, generally at the same time your policies are due for renewal. A good broker will keep you up to date with the current risk environment for your industry. This includes relevant regulatory exposures, such as changes to the Building Act, health & safety, LBP licensing, the RMA, Trust law, that could affect your business operations. They will also provide expert advice and recommendations according to your particular business operations.
For example, if you’re now:
1. Doing builders reports/pre-purchase inspections then you will require specialised cover that can be quite hard to obtain.
2. Engaging designers, surveyors or engineers you may require professional indemnity insurance to cover your potential exposure for errors they may make.
3. Moving from doing residential work to commercial fit outs this could affect the amount of public liability cover you need.
4. Contracted to do maintenance at a boatyard, port, power station, paper mill, dairy factory, manufacturing plant this will require notification to your insurer.
5. Changing from a sole trader to a limited company affects your liability as a director as well as having implications for how past jobs are insured for claims that might arise in the future.
6. Moving from doing renovations to new builds this can affect who arranges contract works insurance for each job.
7. Taking on much larger projects, your cover limits may need to be increased.
8. Employing staff brings liability.
9. Moving from subcontracting to another builder to working directly for the public. This can affect the liability insurance you need (as well as a whole bunch of other things too).
10. Using software to manage projects and do invoicing. This increases your exposure to cyber crime.
11. Hiring in or renting out equipment can affect how your insurance responds and what cover is best suited for you.
12. Purchasing more tools & equipment will require your insurance to be increased.
A broker will ensure that not only do you have the right cover for your risks, but also that you get the best value and claim service. They can also access specialist policy benefits not available from direct insurers.
If you don’t have a broker it is still a good idea to conduct your own review each year. Builtin has a “Tradies Risk Management Checklist” on our website to help with this. Download it at: www.builtin.co.nz/checklist.
Either way, it is important that you spend a bit of time (if only once a year!) reading your policy wordings, so that you understand what is included and want isn’t. Put a date in your diary every year to do this review and refresh yourself on the policy coverage. Builtin’s “Tradies Tips” blog has tons of information to help you understand risk for builders, including claim examples and policy explanations.