What insurance does a tradesperson actually need?

Insurance is one of those costs that feels like money for nothing, right up until the day something goes wrong. A dropped tool through a customer's window, a leak that reaches the flat below, an accident on site. Getting the right cover is part of running a proper trade business, and it is simpler than the jargon makes it look. Here is what actually matters.

Insurance is a business cost — make sure your rate covers it. The free day rate calculator lets you add your annual premiums alongside your van, tools and fuel, and shows what you need to charge a day to still hit your target take-home.

Public liability: the one most trades need

Public liability insurance covers you if your work injures someone or damages their property. If a customer trips over your gear, or a job you did causes a flood, this is the cover that pays the claim and your legal costs. It is not required by law, but for anyone working in customers' homes or on their premises it is close to essential, and many main contractors and commercial clients will not let you on site without it.

Cover is usually offered at levels like £1 million, £2 million or £5 million. Domestic work often sits comfortably at the lower end, while commercial and public sector contracts frequently demand £5 million or more. Check what your bigger clients require before you pick a level, because being underinsured can cost you the contract.

Employers' liability: a legal requirement if you have staff

This is the one with real teeth. If you employ anyone, including part time workers, casual labour or even some subcontractors you direct and control, you are legally required to hold employers' liability insurance with a minimum of £5 million of cover. It protects you if someone working for you is injured or falls ill because of the work.

The penalties are steep. You can be fined up to £2,500 for every day you should have had cover and did not. If you are a genuine sole trader working alone with no staff, you generally do not need it, but the moment you take someone on, sort it out first, not later.

Cover for your tools and van

Your tools are your livelihood, and standard home or van insurance often will not pay out if they are stolen overnight or go missing from site. Tool insurance covers theft and damage, and it is worth reading the small print on where and how the tools must be stored, because many claims are refused over a van left unlocked or tools not removed overnight.

If you use a van for work, make sure it is insured for business use, not just social and domestic. Using the wrong class of cover can leave a claim rejected at the worst possible moment.

Professional indemnity, if you advise as well as fit

If part of what you sell is advice or design, for example specifying a heating system or drawing up plans, professional indemnity insurance covers claims that your advice was wrong and cost the customer money. Not every trade needs it, but if customers rely on your judgement and not just your hands, it is worth considering.

How to buy sensibly

You do not need every policy going, you need the ones that match the risks you actually carry. A sole trader plumber doing domestic work has different needs from a small firm with two employees and a commercial contract. Work out who could sue you and for what, then cover those risks first.

Get a few quotes rather than taking the first number, and be honest about the work you do and the value of your tools, because underinsuring to save a few pounds is what causes claims to be turned down. Many trades bundle public liability, tools and other cover into a single tradesman policy, which is often cheaper and simpler than buying each piece separately.

Keep the paperwork where you can find it

When a client asks for proof of cover, or when you need to make a claim, you want the documents to hand rather than buried in a drawer. Keeping your policy details, renewal dates and certificates alongside your other business records means you can send proof in seconds and never miss a renewal.

Related guides

• Sole trader or limited company: which is right for your trade?

• What expenses can self-employed tradespeople claim?

• How much should you set aside for tax as a sole trader?

Keeping that side of the business tidy, from quotes and invoices to the documents clients ask for, is what TradePilot is being built to help UK trades do. Join the waiting list and we will let you know the moment it launches.