As a qualified and skilled professional in the construction industry, you may work as a contractor or subcontractor, which means it is important that you understand the insurance requirements that come with these roles.
With that in mind, let’s delve into a range common business insurance questions around contractor insurance and subcontractor insurance for trade professionals in the Australian building and construction industry.
Do subcontractors need insurance and does Public Liability cover subcontractors?
Being self-employed, as contractors and subcontractors are, comes with its own risks. There are many different types of contractors, but they all can encounter risks in the course of plying their trade.
As contractor, it’s your responsibility to fix any issues or errors that may occur with your work. 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;
- Moving vehicles;
- Slips, trips, and falls;
- Manual handling (including lifting heavy objects);
- Structures collapsing (such as excavations, walls, and trenches); and
Given all of that, holding insurance for contractors has become a popular way for contractors to reduce their contractor risk. Contractor insurance and subcontractor insurance are types of business insurance designed to reduce the risks to contractors and subcontractors, including financial loss due to common contracting-related risks.
Contractor insurance (BizCover’s name for policies designed to meet the insurance needs of contractors and subcontractors) helps contractors and subcontractors to reduce the financial impact and related consequences when things don’t go to plan on site. These types of business insurance can give contractors and subcontractors peace of mind so that they can fully focus on delivering great work for their clients.
It’s also worth noting that some clients may require contractors and subcontractors to hold certain types of contractor insurance or subcontractor 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.
Professional Indemnity Insurance
Professional Indemnity insurance is an important component of contractor liability insurance that contractors and subcontractors might consider if they give advice or recommendations to clients, 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.
Public Liability Insurance
Public Liability insurance is one of the most common forms of contractor insurance. Subcontractor Public Liability insurance covers subcontractors in the event of personal injury or property damage. Your client, or the general public, could be a third party to a claim in certain cases.
Property damage is one of the most common causes for minor Public Liability insurance claims. You might, for example, be working on a roof and accidentally step through the ceiling; in this case you may be held responsible for the repair or repainting of the ceiling.
Do you need Public Liability Insurance by law?
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.
Looking for an easy way to protect your contracting business from multiple risks? Business Insurance offers contractors a convenient way to package select business insurance policies that can be tailored to a contractor’s individual needs and risk profile as a contractor or subcontractor. As part of your Business Insurance policy you may include several different types of insurance cover, such as Public Liability, Tax Audit, and Business Interruption.
Personal Accident & Illness Insurance
As a contractor or subcontractor you are not eligible for sick leave, and worker’s compensation may not provide adequate cover for you. This is where Personal Accident & Illness insurance is therefore not only essential, but in many cases mandatory for subcontractors at many work sites.
Personal Accident & Illness insurance can cover a portion of your income while you are temporarily unable to due to injury or illness. This is crucial because as a contractor 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.
It’s also worth noting that with BizCover there is an option for contractors to potentially include cover for accidental death or disablement under their Personal Accident & Illness policy, which can provide a lump sum payment to your beneficiaries if you die in an accident, or to you if you suffer a permanent disabling injury.
Other types insurance for contractors and subcontractors
While certain types of business insurance are considered mandatory for contractors, there are other types of business insurance that are not mandatory but can provide further cover that contractors can benefit from. These include:
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 – and without the hassle you may have come to expect when purchasing business insurance in the past.
We provide a quick and easy online platform for contractors and subcontractors throughout Australia to compare competitive business insurance quotes online and purchase their business insurance in less than 10 minutes – and without any paperwork.
Visit our dedicated online destination for contractor insurance to compare competitive insurance quotes for your contractor business, get covered in only 10 minutes, and get back to building your business. If you prefer to speak with us, you can reach our friendly team on 1300 920 867.
This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording.
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ABN 68 127 707 975; AFSL 501769