How Does Tradesman Insurance Work?
You declare your trade, turnover and activities, the insurer prices the risk and issues a schedule of sections and limits, and you pay a premium. When something goes wrong you notify the insurer, pay your excess, and they investigate, defend and settle up to the limit you bought.
Almost every guide to tradesman insurance explains what the cover includes and stops there. That leaves the part you actually need on the day of a claim unexplained.
This one is about the machinery: excesses, indemnity limits, the basis your cover is written on, how a claim is notified and settled, and what your duty to the insurer really amounts to.
Your policy is built from what you declare at the start, so keep your trade description and turnover accurate or a claim can be reduced or refused. Notify the insurer as soon as something happens, not once a client has formally complained, and check whether your cover is written on a losses-occurring or claims-made basis. Read the renewal schedule against last year’s rather than assuming nothing has changed.
Get a tradesman insurance quote that matches how your business actually runs.
- How is a tradesman policy put together?
- What does an insurer ask you before quoting?
- What is the duty of fair presentation?
- How does the excess work on a claim?
- What does your limit of indemnity actually buy?
- Is your cover written on a losses-occurring or claims-made basis?
- How do you notify and run a claim?
- What happens if the business changes mid-term?
- How do cancellation and cooling-off work?
- What actually happens at renewal?
- Frequently asked questions (FAQs)
How is a tradesman policy put together?
It is one contract made of separate sections, each with its own limit and excess, sitting under a single schedule and a single renewal date.
The schedule and the wording do different jobs
The schedule is personal to you: your trade, your declared activities, your sums insured, your excesses and any endorsements. The wording is the standard contract that says what those numbers mean.
Read them together or you will misjudge the cover. The schedule might show £2 million of public liability, while the wording quietly conditions how that limit behaves on a fire claim.
Package versus standalone sections
A package buys the sections together at one renewal date, which is cheaper to administer and harder to leave a gap in. Standalone policies suit trades that need one section on very different terms.
A window cleaner might buy liability alone, while a scaffolder needs liability, plant, contract works and height terms bought as one.
What the certificate is for
The certificate is evidence for other people rather than a description of your cover. It carries your policy number, the insurer, the limit and the period of insurance.
What does an insurer ask you before quoting?
Trade, turnover, number of employees, the activities you carry out, where you work, your claims history and the limits you want. Each answer moves the price, and each one becomes a term of the contract.
The questions that move the premium most
Trade risk does most of the pricing. SimplyQuote’s own cost guide puts tradesman insurance overall between £200 and £1,200 a year, from decorators at £200 to £400 up to scaffolders at £700 to £1,800.
Turnover is the usual proxy for how much work you do. A plasterer turning over £40,000 and one turning over £300,000 are not the same risk even on identical activities.
Why your answers become contract terms
The quote is priced on what you said, so the cover is shaped by what you said. Work you did not mention is work the premium never accounted for.
| What the insurer asks | Why it matters | Effect on the premium |
| Your trade and the exact activities | Height, heat and water exposure drive claim frequency | The single biggest factor |
| Annual turnover | A proxy for how many jobs create exposure | Rises in bands, not smoothly |
| Number of employees and subcontractors | Triggers employers’ liability and changes the rate | Adds an employers’ liability charge |
| Domestic, commercial or industrial work | Site risk and contract values differ | Commercial and industrial rate higher |
| Claims in the last three to five years | Past claims predict future ones | Loads the rate or restricts terms |
| The indemnity limit you want | £1m to £10m are different products | Stepping up costs less than most expect |
| The excess you accept | You take the first slice of every claim | A higher excess lowers the premium |
What is the duty of fair presentation?
Under the Insurance Act 2015 a business buying insurance must make a fair presentation of the risk: disclose what you know, in a way a careful underwriter can follow, without burying anything.
What you have to tell them
Everything a prudent underwriter would want to weigh: the work you do, the height you work at, past claims, refused cover, and any part of the business that sits outside your headline trade.
The duty covers what you know and what you ought to know after a reasonable search of your own business. Ignorance you could have cured does not help you.
What happens when the presentation is wrong
The Act replaced the old all-or-nothing rule with proportionate remedies. A deliberate or reckless breach lets the insurer avoid the policy entirely and keep the premium.
An honest mistake is treated by asking what the insurer would have done had it known. It may charge more, apply a term, or reduce the settlement in proportion to the premium you should have paid.
How does the excess work on a claim?
The excess is the first slice of every claim, and you pay it. Most trade policies carry a compulsory excess set by the insurer plus a voluntary one you choose to knock the premium down.
Compulsory versus voluntary
The compulsory excess is fixed by the underwriter and often differs by section. Property damage excesses are commonly higher than injury excesses, and tools excesses higher again for overnight vehicle theft.
The voluntary excess is your lever. Take more of the small claims yourself and the premium drops, as long as you could actually find the money on the day.
How it applies across sections
The excess applies per claim, per section, not once a year. A tools theft and a water damage claim in the same month means two excesses.
It is why a small £2 million liability claim is often not worth reporting as a claim at all, though the incident still has to be notified.
What does your limit of indemnity actually buy?
It caps what the insurer will pay. Whether that cap resets for each claim or applies across the whole year is the difference between any-one-claim and aggregate wording, and it is the most expensive detail most tradesmen never check.
Any one claim versus aggregate
Any-one-claim means the full limit is available for every separate claim in the period. Aggregate means the limit is a pot for the whole year, and each claim spends part of it.
Public liability is normally written any-one-claim. Professional indemnity is very often aggregate, which is why two claims in one year can leave you underinsured on the second.
Costs inclusive or costs in addition
Some wordings pay defence costs on top of the limit, others take them out of it. On a hard-fought injury claim the legal costs alone can be a serious share of the limit.
| Scenario | Any one claim, £2m limit | Aggregate, £2m limit |
| First claim settles at £900,000 | £2m still available for the next claim | £1.1m left for the rest of the year |
| Second claim settles at £1.4m | Paid in full | £300,000 shortfall you fund yourself |
| Defence costs of £150,000, costs inclusive | Comes out of the £2m | Comes out of the remaining pot |
| Defence costs of £150,000, costs in addition | Paid on top of the £2m | Paid on top of the remaining pot |
Illustrative only. Check the basis stated on your own schedule.
Is your cover written on a losses-occurring or claims-made basis?
Public and employers’ liability are written losses-occurring, so the policy in force when the incident happened responds. Professional indemnity is claims-made, so the policy in force when the claim is made responds.
Why losses-occurring protects old work
A disease claim brought in 2036 about exposure in 2026 goes to the 2026 policy. That is why HSE guidance still recommends keeping old employers’ liability certificates, even though the 40-year retention rule ended on 1 October 2008.
It also means cancelling a public liability policy does not strip cover from incidents that already happened while it was live.
Claims-made, retroactive dates and run-off
On a claims-made policy the retroactive date sets how far back the work can go. Let the policy lapse and every year of advice behind it loses its cover at once.
Run-off cover keeps a claims-made policy alive after you stop trading or stop advising. It is the only way to close a design-and-build chapter cleanly.
How do you notify and run a claim?
Tell the insurer as soon as you know about an incident, admit nothing to the other side, hand over the evidence, and let the claims handler take it from there.
Notify first, argue later
Notification duties bite on the incident, not on the claim. A client saying they might sue is a notifiable circumstance even if nothing lands for months.
Late notification is one of the most common reasons a valid claim gets reduced or refused. A phone call the same afternoon costs you nothing.
Why you never admit liability
Saying sorry on site feels decent and can cost the insurer its defence. Every trade wording carries a condition against admitting liability or offering to pay.
Be helpful and factual with the client, then put the insurer in front of them. The handler decides whether liability is accepted.
Evidence, excess and settlement
Photographs, dates, witness details, a crime reference number for theft, and every message with the client. Insurers settle faster on files that already contain the proof.
Once liability is accepted you pay the excess and the insurer funds the rest up to the section limit. Damaged property is settled on a repair or replacement basis, and injury claims are settled on medical evidence.
Money.co.uk publishes worked trade quotes running from £6.18 a month for a one-person business up to £66.88 a month for a £250,000 turnover with contract works. A single property damage claim usually costs more than several years of either.
| Stage | Who does what | Typical timing |
| Incident happens | You record what happened and take photographs | Same day |
| Notification | You call the claims line with your policy number | Immediately, and always within any stated window |
| Acknowledgement | Insurer opens a file and appoints a handler | Within a few working days |
| Investigation | Handler gathers evidence and assesses liability | Weeks for property, longer for injury |
| Defence or negotiation | Insurer instructs solicitors and runs the case | Months on a contested injury claim |
| Settlement | You pay the excess, the insurer pays the rest to the limit | On agreement or judgment |
| Renewal effect | The claim appears on your record and rates the risk | At the next renewal |
What happens if the business changes mid-term?
You tell the insurer and they endorse the policy, charging an additional premium or returning one. A mid-term adjustment is normal, and it is far cheaper than an argument at claim stage.
The changes you must report
Taking on a first employee, a jump in turnover, a new activity, a change of address, or a new type of client all change the risk. So does a conviction or a claim on another policy.
Hiring anyone triggers employers’ liability from day one, so that call cannot wait until renewal.
How the adjustment is priced
Additional premium is usually charged pro rata for the remaining months, sometimes with an administration fee. A reduction in risk can produce a return premium on the same basis.
How do cancellation and cooling-off work?
You get 14 days to cancel a general insurance policy from scratch under the FCA’s ICOBS rules, and that cooling-off cancellation is what carries the pro rata refund. Cancel later and the policy wording sets the terms, so read the cancellation clause.
The 14-day right and the refund rules
ICOBS 7.1.1R gives 14 days for general insurance and 30 for pure protection. FCA rules also require refunds within 30 days, pro rata for the cover you used, with costs recoverable but no penalty.
Mid-term cancellation outside that window is governed by the policy wording, commonly pro rata less the insurer’s costs. Most insurers treat the full annual premium as earned once a claim has been made, so check your cancellation clause before you switch.
Paying monthly is credit, not a payment option
Premium finance is a regulated credit agreement. Under ICOBS 6A.5.2R the firm must show you the cost of paying in full, the cost of paying monthly and the difference between them side by side, and say that monthly costs more.
Which? research from February and March 2026 put average APRs on monthly insurance premiums at around 21% to 23%, inside a range running from 0% to 29.9%.
No trade insurer publishes its own APR, so the only way to compare is to read the credit agreement. Check the firm on the FCA Register at the same time.
What actually happens at renewal?
The insurer sends a renewal invitation showing last year’s premium against this year’s, and the policy rolls unless you act. That is the moment to re-declare the business rather than nod it through.
Re-declaring the year you actually had
Turnover, headcount, activities and claims all get restated at renewal. A business that has grown and renewed on old figures is underinsured without knowing it.
Limits deserve the same look. SimplyQuote’s cost guide puts £1 million of public liability at around £106 a year against roughly £140 for £5 million, so stepping up is rarely the reason a quote looks expensive.
Continuous cover and the gap you cannot close
Insurance cannot be backdated in the UK. A single uninsured day is a permanent hole, because nothing you buy afterwards reaches back over it.
Continuity matters even more on claims-made cover, where a lapse can strip years of past work. Compare on terms rather than headline price when you move, and check the liability basis you are moving to.
Frequently Asked Questions (FAQs)
Yes. Trade wordings require notification of circumstances that might lead to a claim, and telling the insurer early protects the cover rather than triggering it.
Not always, but it goes on your record and gets rated at renewal. Frequency tends to hurt more than a single large loss.
The excess is the first part of a claim you pay. The limit is the most the insurer will pay, and everything between the two is theirs.
Only up to what you could pay tomorrow without stopping work. The premium saving is worth nothing if it stops you claiming when you need to.
Yes. Expect a pro rata refund for unused cover, possibly less the insurer’s costs, and check the wording for the cancellation terms before you move.
Not on public or employers’ liability, which respond to the policy in force when the incident happened. Claims-made professional indemnity does lose that history unless you buy run-off.
Ask for the reason in writing and use the insurer’s complaints process first. If that fails, the Financial Ombudsman Service reviews eligible complaints free of charge.
Check your wording, because the window is a policy term rather than a general rule. Reporting the same day removes the argument entirely.
No. Cover begins at inception, and an incident that already happened will never be picked up by a new policy.
Almost always, because monthly payment is a credit agreement with interest. The firm has to show you both costs and the difference between them before you commit.