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Home Tradesman Insights Protect your wallet: The importance of financial loss insurance

Protect your wallet: The importance of financial loss insurance

As a trade professional, you probably already appreciate the value of insurance against property damage, personal injury and other physical risks posed while working on client sites. 

However, another major yet often overlooked exposure threatens your enterprise’s financial stability even when no harm or accidents occur:  financial loss claims.

What is Financial Loss Insurance?

Financial loss insurance policies provide special protection by covering compensation demands even in situations where you haven’t directly caused any property destruction or bodily injuries. For example, if delays, disputes or mistakes in your work trigger major unexpected costs for a customer, they may pursue you for reimbursements through legal routes.

Real-World Example

Picture a kitchen fitter contracted for cabinets and countertops with an agreed end date aligned to the homeowner’s impending house sale. Imagine after removing the existing kitchen, the carpenter discovers asbestos in piping, requiring specialist removal that pushes the project back four weeks.

The buyers withdraw their offer due to the overrun, costing the seller their booked removal services, mortgage penalties from a lapsed fixed rate deal and much emotional stress. Understandably, they pursue significant compensation from the fitter for these combined financial impacts.

Without adequate preparation, weighty compensation claims or legal fees emerging from a problem like this may devastate small businesses lacking cash flow protection.  

Core Coverage Provisions

Financial loss insurance normally protects against:

  • Legal defence fees – Covering lawyers costs protects your business and personal assets even if accusations ultimately get dismissed.
  • Compensatory damages – Pays sums awarded to third parties left out of pocket from your mistakes.
  • Loss of income – Reimburses clients’ forfeited earnings like cancelled contracts or productivity disruptions stemming from your actions.
  • Mitigation expenses – Funds clients’ attempts at limiting losses like hiring substitute services, moving events or launching recovery projects.
  • Reputational damages – Recompenses loss of customers and accommodates PR spend rebuilding trust after high-profile disputes.

Key Benefits of Cover

Beyond protecting you from potential compensation claims, Financial Loss insurance also:

  • Gives customers confidence to hire you by showing you can cover errors
  • Helps you partner with suppliers who need you to have contingency plans
  • Lets you take on jobs from contractors that require this insurance
  • Replaces unpredictable claims with steady premium payments
  • Lets you focus fully on daily work rather than worst-case scenarios
  • Gets your business back on track after the worst cases

With the opportunities and peace of mind that Financial Loss protection provides, it is a good idea to review your risks and insurance needs now before regrets may strike. Financial Loss insurance helps you build an even stronger, more resilient business for the future.

Securing Complete Protection

After exploring key exposures and coverage provisions, the importance of having Financial Loss protection alongside existing property, employer liability and other types of trade insurance shines clear.

Tradesman Saver provides Financial Loss insurance as part of our public liability package.

Our standard policies cover up to £10,000 per claim, but we can increase limits to £50,000 for larger jobs. We also include:

  • Public Liability – To cover property damage and injury claims
  • Product Liability – For accidents from goods you supply
  • Legal Expenses up to £250,000
  • Accidental Death cover
  • 24/7 emergency phone support

We want to build long-term relationships with tradespeople. Our simple, integrated insurance packages provide real support when you need it most. If you currently lack Financial Loss insurance or doubt existing protection, contact us today.

Tradesman Talk

Have you ever faced threats of financial loss claims from customers regarding delays, disputes or accidental oversight damages? Did you pursue legal opinions or consider insurance coverage options? How do you currently manage such hazards? 

Share your risk management experiences below! Until next time, make sure it’s Tradesman Saver.

Dean Laming

Dean Laming is a Chartered Insurance Broker with more than 25 years insurance experience. Through various underwriting, operational and management roles, Dean has built up extensive knowledge of how to run a business and is now Managing Director of Tradesman Saver, part of the wider Henry Seymour Group.

All articles by Dean Laming

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