When running a trades business in the UK, it's vital to have adequate insurance in place. However, understanding where personal policies end and business policies begin can be confusing. Without clear separation, dangerous coverage gaps may emerge, leaving you alarmingly exposed.
This guide explains key areas that require crossover protection and strategies to ensure seamless cover continuity across all bases.
Public Liability Insurance
Perhaps the muddiest water between trade and personal cover is public liability insurance (PLI). PLI covers claims if you damage third-party property or cause injury due to negligence.
Many assume household policies include business risks - untrue in most cases. Equally, business policies may only cover work activities, leaving private affairs unprotected.
Strategy: Take standalone trade PLI covering all work-related claims plus additional personal PLI endorsed for incidental business use under household cover too. This belts-and braces tactic bridges potential gaps.
Tools and Equipment
Trade policies won't cover personal belongings like phones or laptops. Nor will household contents insurance typically cover high-value professional gear like bricklaying kango hammers or joinery table saws.
Strategy: Itemise every business asset and get quoted trade cover. For https://www.tradesmansaver.co.uk/builders-insurance/ -value items, add to household contents as specified valuables. For higher-ticket goods, take out dedicated trade tools insurance. Don't rely on vague standard cover.
Vehicles
If business logos are displayed, trade policies won't touch personal car insurance claims. Equally, accidents traveling to clients or transporting materials won't be covered under private motor policies.
Strategy: Fitting dual-purpose vehicles with removable magnetic signage keeps car insurance valid for commuting while preserving trade cover for client trips. Alternatively, take limited business use cover from one insurer spanning both contexts.
Premises
Insurers get jittery if properties operate mixed-use as both homes and trades premises. Grey areas may void claims. If working from a detached workshop, household cover likely won't apply. But trade policies are often limited to external sites.
Strategy: Be explicit with insurers about intended premises use, converting areas into designated commercial zones with higher rated trade policies endorsed to acknowledge homeworking areas too. Keep uses separate and speak to both insurers.
Income Protection
An accident ruling you unfit for work could leave household bills mounting without sick pay or savings - a real risk for sole trader tradespeople. While state benefits provide some backstop, many find these inadequate, triggering financial woes.
Strategy: Take out personal income protection to receive monthly payouts matching earnings for sustained periods if unable to work through illness or injury. This offers a financial bridge until you can resume business operations.
Legal Expenses
A major upside of running your own trades company is avoiding workplace disputes. However, confrontations with difficult customers over payment disagreements or projects gone awry remain an ugly inevitability at times.
Strategy: Subscription legal expenses insurance offers affordable access to professional legal advice, mediation and representation if needed to decisively settle disputes without eating into profits. This backstop can be a lifesaver for small operators.
Wrapping Up
We've explored six key areas where coverage crossover issues often emerge between trade and personal policies, causing costly confusion. Now you understand the core risks, take proactive steps to define and separate domestic and business activities with your insurer's guidance.
Ultimately, identifying grey areas early and taking dual standalone cover across the board is the most failsafe way to avoid gaps. That way you can work confidently knowing all bases are covered.
Avoiding Coverage Gaps Between Trade and Personal Policies
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2 min read
