What insurance do contractors and subcontractors need?

If you work as an independent contractor or subcontractor in the construction industry, you will know there can be many risks involved. Let’s delve into a range of common business insurance options to help you understand how to cover the risks that come with these roles.

Does Public Liability insurance cover independent contractors?

There are many different types of contractors, but they all can encounter risks in the course of plying their trade.

As an independent contractor, it’s your responsibility to manage any risks on your worksites. You could also be subject to a lawsuit or an insurance claim if things go wrong. Beyond that, there are several key risks that contractors may encounter on any given job site, including risks related to:

• Working at heights;
• Slips, trips, and falls;
• Manual handling (including lifting heavy objects);
• Structures collapsing (such as excavations, walls, and trenches); and
• Electricity

To help in managing these risks many contractors choose to cover themselves with Public Liability insurance. But there are many more risks independent contractors can consider insuring; independent contractor insurance (BizCover’s name for a collection of policies designed to meet the insurance needs of independent contractors and subcontractors) helps to reduce the financial impact and related consequences when things don’t go to plan.

It’s also worth noting that some clients may require independent contractors and subcontractors to hold certain types of insurance to work with them. In these instances, contractors will likely be asked to show their proof of insurance before any contracts are signed. Here are some further examples where business insurance can benefit contractors and tradespeople:

• Protection against claims from third parties, such as accidental personal injury as well as damage to their property.
• Protection for your tools in the event that they are lost, stolen, or damaged in the course of your work.
• Specific types of business insurance that may be required when bidding for a contract.
• Financial protection in the event that a claim is brought against you.

What types of business insurance can benefit subcontractors?

As with many other professions in Australia, subcontractors in the building and construction industry can benefit from holding different types of business insurance. So, let’s take a look at the common types of business insurance for contractors and how they can help reduce contractor risk.

Public Liability insurance

Public Liability insurance is designed to provide protection for you and your business in the event a customer, supplier or a member of the public brings a claim against you due to their being injured or sustaining property damage as a result of your negligent business activities.

Public Liability insurance can often be a mandatory requirement for some trades when you operate under a state issued licence. Depending on the state or territory that you work in and the type of trade that you provide, you may be legally required to hold short term Public Liability insurance.

For example, it is a legal requirement in Queensland for electricians to hold the Consumer Protection extension with a minimum level of $50,000 cover in order to obtain an electrical contractor’s licence. It may also be a requirement under a government or private client contract, or as part of a lease agreement for renting commercial property.

Professional Indemnity insurance

Professional Indemnity insurance is an important component of insurance for independent contractors to consider if they give advice or recommendations, provide a professional service, or design custom solutions. Professional Indemnity insurance provides cover for losses claimed by a third party and defence costs due to alleged or actual negligence in your professional services or advice, including your defence costs cover.

Business Insurance

Business Insurance offers contractors a convenient way to package select business insurance policies, and tailor them to suit their individual needs and risk profile. As part of a Business Insurance policy, several different types of insurance cover can be included, such as Public Liability, Tax Audit, and Business Interruption.

Personal Accident & Illness insurance

Personal Accident & Illness insurance can cover a portion of income while you are temporarily unable to due to injury or illness. This is crucial because as an independent contractor or subcontractor you won’t be eligible to receive sick leave. It’s important to note that while Personal Accident & Illness insurance and income protection insurance have similarities, they are not the same.

Product Liability insurance

Product Liability insurance is designed to assist you when your products cause a third party to sustain personal injury or property damage.  Product Liability insurance is intended to cover any compensation payable to a third party, and your defence costs. These are the reasonable costs incurred while investigating and defending a covered claim including legal fees, experts fees and court costs.

Portable Equipment insurance

Portal Equipment insurance (also sometimes referred to as General Property insurance) covers contractors for loss and damage to items of portable equipment associated with your business. These can include the tools of your trade, including expensive power tools, and items of stock.

BizCover: Business insurance for contractors made easy

At BizCover we make buying your business insurance faster and easier than ever. We provide a quick and easy online platform to compare competitive business insurance quotes online and purchase business insurance online in less than 5 minutes. If you prefer to speak with us, you can reach our friendly team on 1300 920 867.