Every plumber knows that a single leak can cause thousands of dollars in damage. Yet many tradespeople treat their insurance coverage with less care than they’d give a dodgy tap washer. The irony is that whilst you’re protecting your clients’ properties from water damage, you might be leaving your own business dangerously exposed.
Insurance isn’t the most exciting part of running a plumbing business, but it’s one of the most critical. The right plumbers insurance can mean the difference between a minor setback and complete financial ruin. Unfortunately, many plumbers make preventable mistakes when selecting, maintaining, or claiming on their policies—mistakes that only become apparent when something goes wrong.
This article explores the most common insurance pitfalls that catch plumbers off guard, explains why these errors can be so costly, and provides practical guidance on how to protect yourself and your business properly.
Understanding Why Plumbers Need Specialised Coverage
Before diving into the mistakes, it’s worth understanding why plumbers face unique risks that demand specific insurance solutions. Your work involves entering clients’ properties, working with water systems that can cause extensive damage if something goes wrong, and using tools and equipment that could potentially injure someone.
Unlike office-based businesses, you’re constantly exposed to situations where accidents can happen. A burst pipe you’re working on could flood a property. A tool could slip and injure a client. Materials you’ve installed could fail months later, leading to costly claims. Without proper coverage, any of these scenarios could bankrupt your business.
Generic business insurance rarely provides adequate protection for trades work. That’s why plumbers insurance exists—to address the specific risks your profession faces daily. Yet many plumbers either don’t fully understand what they need or make critical errors in their coverage decisions.
Mistake 1: Choosing the Cheapest Policy Without Reading the Details
Price shopping is natural when you’re managing business expenses, but selecting insurance based solely on cost is one of the most dangerous mistakes you can make. The cheapest policy often comes with the most exclusions, lowest coverage limits, and most restrictive terms.
Many plumbers don’t discover the gaps in their budget policy until they try to make a claim. By then, it’s too late. You might find that certain types of water damage aren’t covered, or that your policy excludes work above a certain height, or that emergency call-outs aren’t included in your coverage.
Why This Hurts Your Business
When you need to claim and discover you’re not actually covered, you’ll be personally liable for all costs. This could include property damage repairs, legal fees, compensation payments, and more. For significant claims, this exposure could force you to sell personal assets or even close your business.
Additionally, cheap policies often come from insurers with poor claims-handling reputations. When you’re dealing with an urgent situation, the last thing you need is an insurer that takes weeks to respond or looks for any excuse to deny your claim.
How to Avoid This Mistake
Rather than focusing purely on price, compare policies based on coverage breadth, limits, and exclusions. Read the Product Disclosure Statement thoroughly—yes, it’s boring, but it’s essential. Look specifically for what’s excluded, what your excess amounts are, and what documentation you’ll need if you claim.
Consider working with a specialist trade insurance broker who understands the unique risks plumbers face. They can explain the differences between policies and help you understand what you’re actually getting for your money. Sometimes paying slightly more delivers significantly better protection.
Mistake 2: Underestimating Required Coverage Limits
Many plumbers select coverage limits without properly assessing their potential exposure. They might choose coverage that seems adequate for typical jobs but fails to protect them if something goes seriously wrong on a large project.
Coverage limits determine the maximum amount your insurer will pay for a claim. If your policy has a limit that’s too low and you face a significant claim that exceeds that limit, you’ll be personally responsible for the difference.
Why This Hurts Your Business
Property damage can escalate quickly. A pipe failure that floods multiple floors of a building, damages expensive equipment, forces business closures, and requires extensive remediation can easily generate claims in the hundreds of thousands. If your public liability coverage maxes out, you’ll pay the excess out of pocket.
Professional indemnity claims can also be substantial if your work or advice leads to significant financial losses for a client. Legal defence costs alone can consume your coverage limits before any settlement is even reached.
How to Avoid This Mistake
Honestly assess the worst-case scenarios you could face. Consider the most valuable properties you work on, the potential for cascading damage from your work, and the scale of projects you undertake. Your coverage limits should comfortably exceed any realistic claim you might face.
As your business grows and you take on larger jobs, review and increase your coverage limits accordingly. What was adequate when you were a sole trader doing residential repairs might be completely insufficient once you’re running a team and working on commercial projects.
Mistake 3: Failing to Disclose All Business Activities
When applying for insurance, you must accurately describe everything your business does. Many plumbers fail to mention all their services, particularly those they only offer occasionally. They might not mention that they sometimes do gas fitting, install hot water systems, or perform drainage work.
This omission might seem harmless—after all, you’re just trying to keep your premiums down. However, it can invalidate your entire policy if you claim for work you didn’t declare.
Why This Hurts Your Business
Insurers assess risk based on the information you provide. If you claim for an incident related to undisclosed work, the insurer can refuse the claim entirely, arguing that they wouldn’t have offered coverage—or would have charged different premiums—had they known about that activity.
Even if the undisclosed work isn’t directly related to your claim, the non-disclosure could be used to void your policy. This leaves you completely unprotected, potentially owing large sums you assumed were covered.
How to Avoid This Mistake
Be completely honest about all services your business provides, even if you only do them occasionally. If you’re unsure whether something needs to be declared, mention it anyway. It’s better to pay a slightly higher premium for comprehensive coverage than to have a claim rejected.
If your business activities change after taking out your policy, notify your insurer immediately. Adding new services to your coverage mid-policy is straightforward, but claiming for undisclosed work rarely ends well.
Mistake 4: Neglecting Tools and Equipment Insurance
Many plumbers focus on liability coverage but overlook the importance of protecting their tools and equipment. Your tools represent a significant investment and are essential to earning income. Without them, you can’t work.
Tools are frequently stolen from vehicles, job sites, or storage areas. They can also be damaged during transit, in accidents, or whilst being used. If you don’t have appropriate tools insurance, you’ll bear the full replacement cost.
Why This Hurts Your Business
Replacing a full set of professional plumbing tools can cost tens of thousands. If your tools are stolen or destroyed, you’ll struggle to take on work until you can afford replacements. This creates a double financial hit: the replacement cost plus lost income whilst you’re unable to work.
Some plumbers assume their vehicle insurance covers tools, but this is rarely the case. Standard vehicle policies typically exclude tools and equipment, or provide only minimal coverage with high excesses.
How to Avoid This Mistake
Ensure your plumbers insurance package includes comprehensive tools and equipment coverage. This should cover theft, damage, and loss both on and off site. Keep detailed records of your tools, including photographs and receipts, to make claiming easier if needed.
Consider the replacement value rather than the depreciated value when selecting coverage amounts. You need enough coverage to buy new tools, not what your old ones were worth. Also ensure your policy covers tools whilst in your vehicle, at job sites, and in storage.
Mistake 5: Assuming Your Vehicle Insurance Covers Business Use
Your vehicle is central to your plumbing business, but standard personal vehicle insurance typically excludes or limits coverage for business use. Many plumbers don’t realise this until they have an accident whilst driving to a job or carrying tools and materials.
If you’re using your vehicle for business purposes—transporting tools, carrying materials, driving between jobs, or displaying business signage—you need appropriate commercial vehicle insurance.
Why This Hurts Your Business
If you have an accident whilst using your vehicle for business and only have personal insurance, your claim could be rejected entirely. This means you’d be personally liable for damage to your vehicle, damage to other vehicles or property, and injuries to yourself or others.
Even if your personal insurer does pay out, they might then cancel your policy or significantly increase your premiums once they discover you’ve been using the vehicle commercially. You could also face issues with registration if you’re required to have commercial insurance but don’t.
How to Avoid This Mistake
Obtain proper commercial vehicle insurance that explicitly covers business use. Inform your insurer about how you use the vehicle, including transporting tools and materials, displaying business branding, and travelling to job sites.
If you operate multiple vehicles or hire additional tradespeople who drive, ensure all vehicles and drivers are properly covered. Don’t assume that an employee’s personal insurance will cover them whilst working for you—it almost certainly won’t.
Mistake 6: Ignoring Professional Indemnity Coverage
Public liability insurance covers physical damage and injuries, but professional indemnity insurance covers financial losses arising from your professional advice or errors. Many plumbers focus solely on public liability and ignore professional indemnity, not realising they need both.
Professional indemnity becomes relevant when a client suffers financial loss due to your negligence, errors, incorrect advice, or design flaws in work you’ve specified or overseen. This might include recommending unsuitable materials, making design errors that cause problems, or providing advice that leads to costly mistakes.
Why This Hurts Your Business
Without professional indemnity coverage, you’re personally liable if your professional advice or decisions cause financial harm. Legal defence costs alone can be substantial, even if you ultimately win the case.
As projects become more complex and clients more sophisticated, professional indemnity claims are increasingly common in the trades. What might have once been shrugged off as “one of those things” now leads to formal claims seeking compensation.
How to Avoid This Mistake
Include professional indemnity coverage in your insurance package, particularly if you provide design advice, recommend systems or materials, or supervise complex installations. The coverage should extend to past work (retroactive cover) since claims often arise months or years after the work was completed.
Ensure your policy includes adequate run-off cover, which protects you from claims made after you’ve stopped working or retired. Professional indemnity is a “claims made” policy, meaning you need coverage in place when the claim is made, not just when the work was done.
Mistake 7: Not Updating Coverage as Your Business Grows
Your insurance needs change as your business evolves. What was adequate when you started as a sole trader becomes insufficient once you employ staff, take on larger contracts, or expand your service offerings.
Many plumbers take out insurance when they start their business and never review it properly. They might increase coverage limits occasionally, but they don’t reassess whether their policy still matches their current business activities and risk profile.
Why This Hurts Your Business
Operating with outdated coverage creates dangerous gaps in protection. You might not have adequate coverage for employees, your policy might exclude services you now offer regularly, or your limits might be far too low for the scale of work you now undertake.
If you employ people without appropriate employers’ liability coverage, you could face significant personal liability if a worker is injured. Similarly, taking on commercial projects without adequate coverage puts both your business and personal assets at risk.
How to Avoid This Mistake
Review your insurance annually at renewal time, and also whenever your business changes significantly. This includes hiring employees, purchasing major equipment, starting new service offerings, or taking on substantially larger projects.
Keep your insurer informed about changes to your business throughout the year. Most insurers allow you to adjust your coverage mid-policy, and it’s far better to pay a slightly higher premium than to discover you’re underinsured when you claim.
Mistake 8: Misunderstanding Excess Amounts and When They Apply
Every insurance policy includes excess amounts—the portion you pay when making a claim. Many plumbers don’t fully understand how excesses work, leading to unpleasant surprises when they claim.
Different types of claims may have different excess amounts. Your policy might have one excess for property damage claims, another for theft claims, and additional excesses for certain types of incidents or if particular circumstances apply.
Why This Hurts Your Business
If you don’t understand your excess structure, you might file claims for amounts barely worth claiming, essentially paying the repair cost yourself whilst also potentially increasing your future premiums. Alternatively, you might avoid claiming when you should because you’ve overestimated the excess.
Some policies include additional excesses in certain circumstances. For example, you might face a higher excess if a claim occurs outside business hours, if an unlicensed driver was operating your vehicle, or if your tools were stolen from an unsecured vehicle.
How to Avoid This Mistake
Carefully review the excess structure in your policy. Understand the base excess amounts and any additional excesses that might apply in specific circumstances. Consider whether you can afford the excess amounts if you need to claim—there’s no point having insurance if you can’t afford to use it.
You can often choose your excess levels when taking out insurance. Higher excesses reduce premiums but increase your out-of-pocket costs when claiming. Find a balance that keeps premiums manageable whilst ensuring you can afford the excess if needed.
Mistake 9: Neglecting to Document Everything
When something goes wrong and you need to claim, documentation becomes critical. Yet many plumbers don’t maintain adequate records of their work, correspondence with clients, site conditions, or the precautions they took.
Poor documentation makes claiming difficult and can result in reduced settlements or rejected claims. If you can’t prove what happened, what condition things were in, or what you actually did, you’re at a significant disadvantage.
Why This Hurts Your Business
Without proper documentation, it becomes a question of your word against the client’s. If you can’t demonstrate that you completed work properly, used appropriate materials, or warned the client about potential issues, you’ll struggle to defend against claims.
Insurers need evidence to process claims efficiently. If you can’t provide photographs, written quotes, signed job completion forms, or records of conversations, your claim will take longer to resolve and might not be settled in your favour.
How to Avoid This Mistake
Develop systematic documentation practices for every job. Take photographs before, during, and after work. Keep written records of communications with clients, particularly when discussing scope of work, costs, potential issues, or recommendations.
Use job sheets that clients sign upon completion. Keep copies of quotes, invoices, material specifications, and warranties. If you identify pre-existing issues or potential problems, document these and ensure the client acknowledges them in writing.
Modern smartphones make documentation easier than ever. Take time-stamped photos, use apps to create digital job sheets, and keep cloud-based records that won’t be lost if your device is damaged or stolen.
Mistake 10: Failing to Understand What’s Actually Excluded
Every insurance policy has exclusions—specific circumstances or types of claims that aren’t covered. Many plumbers never read the exclusions section properly, leading to nasty surprises when they try to claim for something they assumed was covered.
Common exclusions in plumbers insurance might include damage from gradual deterioration, faulty workmanship, damage to the work itself, pollution incidents, or work performed without proper licences or permits.
Why This Hurts Your Business
If you’re working under the mistaken belief that something is covered when it isn’t, you’re taking uninsured risks. This false sense of security is often more dangerous than knowing you’re uninsured, because at least then you’d take additional precautions.
Exclusions often catch plumbers off guard because they seem technical or use industry jargon that’s easy to misinterpret. You might think you understand what’s excluded, but the actual policy wording could be broader than you realised.
How to Avoid This Mistake
Read the exclusions section of your policy carefully, and if anything is unclear, ask your insurer or broker to explain it in plain language. Understanding what’s not covered is just as important as knowing what is covered.
Pay particular attention to exclusions around the type of work you do most frequently. If your policy excludes certain activities or circumstances you regularly encounter, either find a policy that does cover them or implement risk management strategies to minimise exposure.
The Cost of Getting It Wrong
The insurance mistakes outlined above aren’t just theoretical concerns—they have real financial consequences that can devastate plumbing businesses. The costs extend beyond the immediate claim amount to include legal fees, increased premiums, damage to reputation, and lost business opportunities.
When an uninsured or underinsured incident occurs, you might need to pay out of pocket for property damage, compensation, legal defence, and remediation work. These costs can easily exceed your business’s annual profits, and in severe cases, they can force you to liquidate business and personal assets.
Beyond the direct financial impact, insurance problems damage your professional reputation. Word spreads quickly in the trades, and being known as someone who isn’t properly insured or who can’t pay for damage they’ve caused will cost you future work.
The stress and distraction of dealing with uninsured claims also takes a toll on your ability to work effectively. Instead of focusing on running your business and serving clients, you’ll be consumed by legal processes, negotiations, and financial worries.
Taking Control of Your Insurance Coverage
The good news is that all these mistakes are preventable. With proper understanding and regular attention to your insurance arrangements, you can ensure you’re adequately protected without overpaying for unnecessary coverage.
Start by conducting a comprehensive review of your current insurance policies. Read through all the documentation, noting coverage limits, exclusions, excesses, and any areas that don’t align with your current business activities.
If you’re unsure about any aspect of your coverage, speak with your insurer or engage an insurance broker who specialises in trades insurance. They can review your existing coverage, identify gaps, and recommend improvements.
Create a system for reviewing your insurance regularly. At minimum, conduct a thorough review annually when your policies come up for renewal. Also review your coverage whenever your business changes significantly—hiring employees, expanding services, purchasing major equipment, or taking on larger projects.
Keep detailed records of your insurance policies, including policy numbers, coverage limits, excesses, insurer contact details, and claims procedures. Store this information securely but accessibly, so you can find it quickly if you need to make a claim.
Making Insurance Work for Your Business
Insurance shouldn’t be viewed as just another business expense or regulatory requirement. When properly structured, your plumbers insurance becomes a valuable business tool that enables you to take on larger projects, provide better service to clients, and sleep soundly knowing you’re protected.
Good insurance coverage allows you to work confidently, knowing that if something does go wrong, you won’t lose everything you’ve built. It enables you to focus on delivering quality work rather than constantly worrying about what might happen if things go wrong.
Many larger clients and commercial projects require contractors to provide evidence of adequate insurance before they’ll engage you. Having comprehensive, properly documented insurance coverage opens doors to opportunities you might otherwise miss.
Insurance also demonstrates professionalism and commitment to your clients. When clients know you’re properly insured, they have confidence that if something does go wrong, they won’t be left out of pocket whilst you try to scrape together funds to fix problems.
Moving Forward with Confidence
The plumbing industry involves inherent risks that can’t be completely eliminated, no matter how careful or skilled you are. Materials fail, accidents happen, and sometimes things go wrong despite your best efforts. That’s exactly why proper insurance coverage is so critical.
By understanding and avoiding the common insurance mistakes outlined in this article, you’ll be far better positioned to protect your business, your assets, and your future. The time and effort invested in getting your insurance right pays dividends throughout your career.
Don’t wait until something goes wrong to discover gaps in your coverage. Take action now to review your policies, address any shortcomings, and ensure you have the right protection in place. Your future self—and your business—will thank you.
Remember that insurance is there to protect you when things go wrong, but it can only do that if you’ve structured it properly in the first place. Make the effort to understand your coverage, maintain adequate limits, disclose all relevant information, and keep everything up to date as your business evolves.
Frequently Asked Questions
What’s the difference between public liability and professional indemnity insurance for plumbers?
Public liability insurance covers physical damage to property or injuries to people caused by your work or business activities. Professional indemnity insurance covers financial losses that arise from your professional advice, errors, or omissions. Most plumbers need both types of coverage. Public liability protects you if your work causes a flood or someone trips over your equipment, whilst professional indemnity protects you if your advice or design recommendations lead to financial losses for a client.
How much plumbers insurance coverage do I actually need?
Coverage requirements depend on the size and nature of your business, the types of projects you undertake, and the potential severity of claims you might face. At minimum, most plumbers should carry public liability coverage of several million in coverage limits, comprehensive tools and equipment insurance, and professional indemnity cover appropriate to their advice-giving activities. As your business grows and takes on larger projects, your coverage should increase accordingly. Consider the most valuable properties you work on and the worst-case scenarios you could face when determining appropriate limits.
Do I need to tell my insurer if I occasionally do gas fitting work along with standard plumbing?
Yes, you must disclose all services your business provides, even those you only perform occasionally. Insurers assess risk based on the full scope of your activities, and failing to disclose certain types of work can invalidate your entire policy. Gas fitting carries different risks than standard plumbing work, and your insurer needs to know about it to provide appropriate coverage. It’s always better to pay a slightly higher premium for comprehensive coverage than to have a claim rejected due to non-disclosure.
What happens if I make a claim on my plumbers insurance?
When you make a claim, you’ll need to notify your insurer as soon as possible and provide detailed documentation of the incident, including photographs, written descriptions, and any relevant correspondence. Your insurer will investigate the claim, which may involve assessors inspecting the damage or speaking with involved parties. If the claim is approved, you’ll typically need to pay your excess amount, and the insurer will cover the remaining costs up to your policy limits. The claims process can take from a few weeks to several months depending on the complexity of the claim.
Will my insurance premiums increase after making a claim?
Making a claim may affect your premiums at renewal, though this isn’t automatic and depends on various factors including the nature and size of the claim, your claims history, and your insurer’s policies. Some insurers offer claim-free discounts that you might lose after claiming, whilst others factor in your overall claims history when calculating premiums. However, you shouldn’t avoid making legitimate claims solely to keep premiums down—that’s what insurance is for. Instead, focus on implementing good risk management practices to minimise the likelihood of future claims, which will help keep your premiums competitive over time.
