Comparing Public Liability Policies What makes one tradies public liability policy different to another? We speak with a lot of trade business owners every week, and sometimes we’re asked why there is a difference in cost between two policies which seem the same. The thinking is, if one public liability policy covers for $5 million, it’s no different to another policy which covers the same trade for the same amount. And with that being the case, why would one policy be more expensive than the other? Presumably the more expensive one is just a rip-off, right? Wrong! Two policies which seem the same on the surface can actually be massively different, and can have huge consequences at claim time.
When comparing the premiums on two different public liability insurance policies, make sure you look at the excess and not the initial cost.
Domestic V Commercial Work All polici es don’t necessarily cover all types of work. Taking an electrician as an example, some insurer’s standard public liability policies only cover domestic, some cover domestic and light commercial, whilst others cover anything other than industrial. But that might not be completely obvious when looking at the quote. Instead you need to dig into the Product Disclosure Statement (PDS), policy wording or policy schedule.
Excess
As an electrician you might get one public liability quote for $500 and another for $700. You might think the $700 policy is too expensive, without realising that the cheaper one won’t actually cover the industrial work you’re doing.
This is a fairly basic difference that most people will understand. Just like your home or car insurance has an excess, so does public liability insurance. Some policies have an excess as low as $250 per claim, whilst others can be $2,500 or more.
If you then need to make a claim for the industrial work you were doing, you could find your claim declined and yourself out of pocket by thousands of dollars (or much more) just because you tried to save a couple of hundred on the premium.
The higher excess could be a result of your higher-risk trade, your claims history or perhaps an insurer which just has a higher excess for their own reasons.
Make sure you check that all of your work activities are included. A good trade insurance specialist broker (such as Trade Risk) can help you through this process.
Let’s take a look at some of the differences…
Either way, the difference at claim time is important. You might choose a policy which is $50 a year cheaper but has a $500 excess. If you don’t make a claim, you’ve done well. But if you do make a claim, you would have been better off with the slightly more expensive policy that had a lower excess.
12 | Aussie Painting Contractor
Exclusions Whilst there are some fairly standard exclusions across the public liability insurance policies offered by different companies, there are some unique differences too.
