Holding the right cover is only half the job — using it well is the other half. Here is how a tradie actually makes a claim across public liability, tools, contract works and income protection; the six reasons claims get knocked back; the underinsurance trap; and how to fight a denial through IDR and AFCA. This is general guidance, not financial advice — your broker is your first call.
Making a claim — the steps
The process is similar across covers:
- Make things safe and collect evidence. Injury or third-party: make the site safe, get witness contacts, take wide and close-up photos of the damage, layout and any barriers or signs. Theft or vandalism: photograph the scene, entry points, damaged locks, empty storage.
- Report theft or vandalism to police — quickly. Most tool and contract-works policies require it within 24–48 hours or "as soon as practicable", and insurers usually will not assess a theft claim without a crime reference number (CRN).
- Notify your broker or insurer EARLY — not after you "see how it plays out". Policies require notice "immediately" or "as soon as practicable", sometimes with a hard limit (e.g. 30 days). Late notification is one of the most common denial grounds, especially on liability.
- Lodge the claim with full details — date and time, location, what happened, what was damaged, estimated cost, injured-party details. Income protection: work details, last day worked, doctor's certificates, income proof.
- Supply evidence and answer follow-ups — invoices, receipts, photos, medical evidence, quotes. Organised and responsive means a faster decision and fewer reasons to delay.
- Assessment and settlement — the insurer checks the policy, exclusions, underinsurance and compliance (a loss adjuster may be appointed for large or complex claims), then repairs, replaces or cash-settles less the excess.
Do not admit liability or promise to pay on a third-party claim without the insurer — early notice lets them run the defence.
Evidence by cover
- Public liability: incident report, photos of the site, damage and safety measures, witness contacts, repair quotes, any letters of demand.
- Tools: itemised list (make, model, serial), proof of ownership (receipts, bank statements, photos), scene-after photos, police CRN, security evidence if required.
- Contract works: before and after photos, plans, scope, progress claims, rectification quotes, council orders or engineer reports — and watch the sums insured.
- Income protection: medical certificates (diagnosis, work capacity), proof the injury fits the policy definition and waiting period, pre-disability income proof (tax returns, BAS).
Why claims get denied
- Non-disclosure (Insurance Contracts Act 1984) — a commercial insured must disclose everything relevant to the insurer's decision (claims history, high-risk work like heights, structural steel or asbestos, past refusals). Failure can let the insurer reduce, re-term, or avoid the policy from inception.
- Underinsurance — the average clause (below).
- Exclusions — wear and tear, gradual deterioration, rust, faulty workmanship; tools left unsecured or stolen without forced entry; liability exclusions for fines, contractual guarantees, asbestos, hot work without permits, or work outside your stated business activities.
- Unlicensed or non-compliant work — a loss from work you are not licensed for, or that breaches AS/NZS standards or codes, can be refused.
- Late notification — see step 3.
- Wear-and-tear vs sudden accidental — policies cover sudden events, not gradual deterioration (a drill burning out after years, a roof slowly ruining materials).
(The full exclusion map is in What Your Insurance Does Not Cover.)
The underinsurance trap (average clause)
If your sum insured is less than a set percentage (often 80–100%) of true value, the insurer reduces any claim in proportion:
payout = loss × (sum insured ÷ true value)
Example: contract works truly worth $400,000 but insured for $200,000; a $100,000 loss pays $100,000 × 200,000 ÷ 400,000 = $50,000 (less the excess). Set sums insured properly: tools at current replacement cost (not old purchase price), with high-value items listed; contract works at full contract price plus variations and inflation; income protection at true average earnings.
Disputing a denial — IDR then AFCA
- Internal Dispute Resolution (IDR) — every AU insurer must have one. Complain in writing (claim number, the denial or offer letter, where you disagree, the policy wording, and new evidence — better valuations, photos, expert reports). The IDR team is separate from the claims handler and must give a written final response, commonly within 30 days.
- AFCA (Australian Financial Complaints Authority) — if you are unhappy with the IDR outcome or get no response in time, AFCA is a free, independent ombudsman for consumers and small businesses. It weighs the law, the Insurance Contracts Act, industry codes and good practice. It can consider small-business claims up to about $1.26 million (indexed), generally within 6 years of the event (and a shorter window after the final IDR response). AFCA can order the insurer to pay, refund or correct records; it cannot rewrite policies for everyone, award unlimited damages, or stop you going to court.
Claim-ready habits
- Tool inventory and proof of ownership — a register (item, make, model, serial, date, cost), receipts in a digital folder, gear marked and photographed.
- Photo habits — dated photos of loaded vans, site storage, high-value gear and finished work before high-risk stages; after an incident, photograph everything before tidying.
- Security and compliance — follow the policy's security conditions (locked storage, alarms), and keep work licensed and documented (SWMS, permits, test results).
- Notify and record — the moment "this could be a claim", note it and tell your broker; log calls and keep all correspondence.
- Know your PDS exclusions — read the Product Disclosure Statement at renewal, not claim time; ask your broker in writing how your cover responds to your actual work.
- Habit stack: a quarterly "tool audit and photo day", plus a "policy check-in" (do the sums insured and activities still match the business?).
Common mistakes
- Waiting to notify instead of reporting early.
- No police CRN on a theft claim.
- Admitting liability on a third-party claim.
- Underinsuring tools or contract works.
- Reading the PDS only at claim time.
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