Insult to Injury

Insult to Injury

Accidents do happen, but how well cushioned are you? Gareth Howell, Managing Director at AXA Insurance plc, looks at the options available to trade professionals.

Elsewhere in this article you’ll read about the case of a PE reader who suffered severe financial hardship when he was unable to work due to a broken wrist. His situation is far from uncommon, and highlights a very misunderstood area of insurance in the trades.

Common insurances

Sympathy is the first reaction to the story, largely because this reader is very typical of UK tradespeople. They tend to be fiercely self-reliant people whose trade delivers them a good local reputation and a solid income for their families.

Almost universally, they take out common insurances like public liability and employers’ liability to protect their customers and employees. The one person who gets neglected is, too often, themselves.

Personal accident cover is what we are talking about here. It pops up at the end of a quote or your renewals letter as an additional cover available to your core cover (often to public liability). The majority – 77% of electricians and installers decline it (data from AXA Business Insurance, survey of 500 tradespeople, 2016).

So, why would you consider taking it out?

If you take out the ‘weekly benefits’ option, it guarantees a weekly wage if you suffer an injury and are temporarily unable to work. You can also nominate a business partner as well – say, if you are a two-man band equally reliant on the firm working at full capacity.

Typically, as an electrician, ticking this option will set you back about £25 per month on top of your public liability premium if you want £500 per week in income covered. We’re taking as our test case an electrician working as a sole trader, not engaged in high-risk activity. It’s important to be aware that in any case there are often ‘excesses’ applicable – say, payments kick in after 14 days off work, for example.

It is well worth weighing up whether this cover would make financial sense for you. You may have good contingencies in place already, but it merits asking a few key questions:

  • What would happen to your business income if you couldn’t work for several weeks or months? In a recent AXA survey, 44% of tradespeople said that if they had an accident, they would effectively need to close the business for the duration of their recovery.
  • Do you have employees or sub-contractors who could replace you in the firm for a few weeks? Just 28% of electricians we spoke to said they could get work covered by another qualified professional.
  • While personal accident cover provides temporary income, it wouldn’t pay for temporary workers to replace you. How long could you survive on current funds and savings? The average UK small firm could keep going for three months on current funds.

If you do take out this cover, it’s a good idea to familiarise yourself with the claims process. The main thing is to call your insurer as quickly as possible – early warning of a claim always smooths the process over. Next, make sure you obtain a letter from your hospital or GP stating the nature of your injury and inability to work (not dissimilar from a classic sick note).

Most insurers should apply basic common sense and speed your claim up too – a broken wrist means you can’t do a rewiring job, no matter how good you are!

Common exclusions, again, tend to follow common sense: you wouldn’t be covered for an injury you had before your cover start date, or if you injure yourself while drunk or under the influence of drugs. A full list of terms will be found in your policy documents.

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I’ve been self-employed for a few years now and when it came round to the usual yearly renewal of my PL insurance I made the mistake of skipping over the extra bits under accidents or loss of earnings cover. Looking back now I really wish that I hadn’t!

After sustaining a broken wrist due to a fall at a customers’ premises I had a nice break (no pun intended) of six weeks. During this time I went unpaid due to my slight ‘oversight’ when it came to adding the cover.

I was given a sick note from the hospital A&E department but this essentially meant nothing as I am my own ‘employer’. I am, however, an ’employee’ at a company under a zero-hours contract but my last work with them was in August last year due to my own personal workload. Because of this and the rules and regulations covering zero-hours I was not even entitled to any SSP.

Cutting to the chase, if you don’t have any cover for accidents in place then you should get some! I’ve not fully worked out how much I’m out of pocket but I’m guessing it’s in the region of £2,500 at least, all of this taken from savings.

There have been several of my long term customers who have held back until I was up and running again but I’ve lost lots of jobs as working in the domestic area clients tend to have a ‘wait problem’ – they can’t wait! The previous figure I gave doesn’t include what these jobs might have brought in and I don’t dare to think about it.

During my ‘off’ time I was looking at the fibreglass extra on my forearm and felt like writing on it “under every cast there is a lesson to be learnt. On a brighter note the van got a good tidying!

John Nixon, Self-Employed Electrician



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