By Tanya Olckers
Running a small plumbing business involves navigating a host of challenges, and making sure you have adequate insurance coverage is paramount. We spoke to Ken Hawkins, insurance broker at Inscon Hawkins and Associates in Johannesburg.
All pictures supplied by Freepik
If you want to know anything about insurance, the best person to ask is someone who works in the industry. It’s easy to get confused about what to do for your business and for yourself, personally, in terms of insurance. What policies do you get? What needs to be covered? What risks do you have? Ken Hawkins specialises in insurance and offered some advice for plumbers.
IOPSA executive director Steve Brown says, “Insurance is a grudge buy until you need it. Trying to save money by not costing in insurance could cost you your business.”
This is undoubtedly true, as down the line if things go wrong, which they do, having cover can mean the difference between going under or keeping going.
“Purchase a Contractors All Risks, blanket annual policy from a specialist Engineering Insurer for on-site risks,” Hawkins advises. Monthly premiums can be arranged on this policy and it covers site works, liabilities, materials in transit and on site – along with various plant items.
A Commercial Insurance Policy is also valuable and this covers the plumbers premises: office contents, materials in stock, electronic equipment, vehicles, accident risks to staff, liabilities and all risks items like small tools.
And while taking care of your business with insurance is vital, it’s also important to remember that you need to cover yourself as well. Hawkins recommends personal life cover and disability and critical illness cover. this means that if you are unable to work, your business can go on and you and your family can still be provided for.
“Income protection can be purchased to replace business overhead expenses as well as personal needs should a temporary or permanent disability occur,” says Hawkins. “This will assist with cash flow for the business while the owner is unable to work.”
A plumbing business can take out a freestanding specific contract liability policy or a blanket liability policy to cover liability matters on site. What does this mean? Essentially, like any contractor, the plumbing contractor is also exposed to potential financial consequences on site. Where the contractor or one of the staff are found to be negligent resulting in the death of or injury to third parties or damage to third party property, a Contractors Liability policy will provide assistance with legal defence and payment to the third party.
“Contractors Liability cover on site is typically taken out with an engineering specialist insurer,” says Hawkins, “General Liability Cover is typically taken out with a commercial insurer. Directors and Officers Liability is typically taken out with a Specialist Financial Liability Insurer. As these various types of liability differ in nature, individual specialist insurers offer product specific in nature.”
What about tools and vehicles? Vehicles such as cars or bakkies can be insured on a commercial policy. Smaller tools can also fall under the commercial policy on an all-risks basis. Larger plant items – like tipper trucks and larger type mechanical plant and equipment – can be insured on a contractors’ plant policy. Hired plant can also be covered. Trucks would also fall under the plant policy, depending on the size of the vehicle.
A common mistake we make is to stumble blindly into the world of insurance and not have much idea of what we need or how to go about assessing our needs. Hawkins advises that the best thing any business can do, before taking out insurance, is to sit down with an experienced broker to talk about risks and needs – especially if it’s a new business.
“Business owners are advised to continually stay in contact with the insurer or broker as risks and conditions change over time,” Hawkins says. “Tender documents, for example, may also have specific insurance conditions like who the insured parties must be and also what minimum limits of indemnity are to apply and so on.”
Setting up a business is more than just getting a set of tools and setting off into the world to perform plumbing. There are so many other considerations and insurance is one of them, and one that could often be overlooked in favour of other expenses. However, this is a significant part of not just running your business, but making sure that you are covered for whatever eventuality may arise.
Hawkins offers a final piece of advice: “The main pitfall for the plumber is not discussing all the risks with an experienced and licensed broker. Also, it’s important for plumbers to keep an eye on the tender condition insurance details.”
