Risk Management – What you need to know if you are hiring trades
Hiring a tradie at your place this summer? Don’t risk using unlicensed and uninsured contractors
As 2020 thankfully draws to a close, many of us will take a well-deserved break over the Christmas season. Holidays always present a great opportunity to attend to those long overdue jobs around the house.
The remaining few weeks of the year are often a very hectic time for many tradespeople as they rush to complete projects by their end of year deadlines.
Having spent so much of our time in isolation at home during the COVID 19 pandemic, it comes as no surprise that the home improvement industry is booming.
Anyone working from home during this time could easily be forgiven for keeping one eye on their work emails, and the other eye on that catalogue of luxury, new kitchen designs!
If you’re considering renovating your home, then you might be wondering which tradesperson to hire. With so many tradies to choose from, it’s perfectly understandable that you might be influenced by a friend or colleague’s glowing recommendation.
However, make sure you practice due diligence by conducting a thorough background check on your tradie, before you make any final decisions. This would include checking that they are currently licensed and insured.
How to minimise the risks and find the best tradie for the job!
Follow each of these tips when deciding the best tradie to work on your most important material asset – your home.
Get cracking by obtaining quotes from at least three different tradespeople in the field of expertise that you require. Compare the prices.
If one charges substantially more than the other two, ask them to justify the reason for their higher fees. A possible explanation for this could be due to their business employing more workers than the other two contractors.
Pick the contractor whose price most closely aligns with your budget.
Speak with referees
Having a chat with at least two of your tradie’s former clients is an excellent way of finding out how suitable they will be for your project. Try to gather as much information as you can about the tradesperson’s past performance.
Ask them how satisfied they were with the standard of workmanship. Was the work completed within the specified timeframes? Would they choose to work with that contractor again?
Hopefully, you will gain honest and objective reports from each referee. If two reports provide conflicting viewpoints, try to speak with a third referee and make your decision accordingly.
Demand a legal contract
Setting out the details of the planned repairs and/or renovations in a legal contract is of critical importance. Ensure the document is prepared by a qualified legal professional who has expertise in the building and/or other trade industries.
A written contract should clearly state all of the fundamental aspects of the project. Some of these should include what works are to be conducted and the desired outcomes, timeframes for completion, what materials will be required, as well as a breakdown of the costs involved.
Signed legal contracts keep everyone accountable and minimise the likelihood of disagreements or misunderstandings arising at a later stage.
Check their ABN
Most businesses operating in Australia have an Australian Business Number (ABN). This is like a business’s fingerprint, an essential form of identification. A business’s ABN must be clearly stated on any invoices they issue to clients.
Having an ABN in itself is by no means a guarantee that the person you’re hiring is a competent tradesperson. However, at least you’ll know that they have taken one of the initial steps in starting a legitimate business.
Look for your tradie at the Australian Business Register website – ABN Lookup.
Find out if they are licensed
When assessing potential tradespeople for your project, always ask them to show you their licence. Hiring unlicensed contractors can cause major dramas for you as the property owner if an injury occurred, or if any property was damaged.
Unlicensed tradespeople quite often haven’t completed the training or obtained the qualifications necessary to work in their field. Therefore, this lack of skills can become apparent in the inferior quality of their handiwork. They are also more likely to cut corners and disregard important safety procedures.
You, as the home owner, can be held liable for any property damage or injuries caused by the actions of an unlicensed contractor. In addition to the initial costs you agreed on, imagine paying thousands of dollars extra to amend their mistakes. Furthermore, being held accountable for a workplace injury that occurred on your property could be financially devastating!
Licensed contractors have invested the time and effort to acquire the skills and expertise needed for their chosen trade. Additionally, they have committed to undertake any further training that may be required of them by becoming licensed.
Check that your tradie is licensed on your State Fair Trading website for confirmation.
Request proof of insurance cover
Only agree to hire tradespeople who have insurance cover for Public and Product Liability (to cover against third party property damage and/or injuries), Income Protection and Workers Compensation (if employing workers). Although most reputable contractors will have these types of cover in place, don’t just take their word for it.
Request to see Certificates of Currency or other written evidence that their premiums are paid to date for each of these covers. If your tradie balks at providing this information, then regard this as an alarm bell that they don’t have cover, and continue your search for an insured contractor.
Like commercial sites, residential building sites present an abundance of potentially dangerous situations. Despite having the best safety precautions in place, a work site is still a danger zone.
As a home-owner, receiving visits from contractors and/or other commercial parties exposes you to the risk of litigation, if an injury were to occur on your property.
The long-lasting emotional impact of having somebody sustain a catastrophic or even fatal injury at your home, would be tough enough to deal with.
Without an adequate insurance plan in place to protect you from litigation, how would you afford the massive legal and medical fees?
Leave it to your Broker to find you the right coverage
Berkley Insurance Australia offer outstanding Public and Products Liability insurance to protect you, the property owner, against damages sought by any injured third parties.
Occupational settings always offer an element of danger. However, having a steadfast Public and Products Liability insurance policy in place can give you tremendous relief, during challenging times.
Berkley Insurance Australia is a registered business name of the Australian branch of Berkley Insurance Company (ABN 53 126 559 706). Berkley Insurance Company is authorised by the Australian Prudential Regulation Authority as a general insurer to conduct new or renewal business.
The information and opinions contained in this document are general in nature. You should consider what insurance is appropriate for you or seek independent insurance advice.