As a subcontractor there are various forms of insurance you may require, and the most common of these is public liability.
Public liability insurance is important for subbies as in 99% of cases you will not be covered by the head contractors insurance, which could leave you exposed if something goes wrong.
In this guide we will look at what public liability covers, which subbies need it and how much you can expect to pay.
What is it?
Public liability will cover the costs of a claim involving property damage or personal injury that you cause to another person through negligence.
If you are found to be liable for someone else’s injury or damage to their property, you could be up for some serious costs. These can range from a few hundred dollars to a few million dollars.
The best way to explain public liability insurance is to look at some claim examples.
The first example is for personal injury. In this case a plumber dug a ditch in the backyard of a property. An elderly neighbour popped in next door to see what was happening, and tripped over in the ditch.
After the insurer investigated the incident it was found that the plumber was responsible as he didn’t clearly mark the ditch. The neighbour suffered a broken leg and wrist, and the insurer paid the considerable costs that the plumber was found to be liable for.
The next example is for property damage. In this case an electrician was rewiring part of a house when a small fire broke out which caused some minor damage.
After an investigation it was found that the electrician’s faulty wiring caused the fire. The insurance company paid out a claim for the cost of the repairs that the electrician was responsible for.
Which subbies need it?
Virtually all subcontractors will need their own public liability insurance. There are some exceptions where a company will have an insurance policy that covers its subbies, but this is very uncommon.
Many building and construction companies will have mandatory public liability requirements, and without the insurance a subcontractor will not be allowed onto the worksite.
Some subbies will also require it for their licence. Electrical and plumbing contractors in most Australian states will find that insurance is mandatory for their respective licenses.
Even if you are not required to have insurance to enter a work site or obtain your licence, it is still highly recommended that all subbies have their own cover in place to protect themselves.
How much does it cost?
The cost of public liability insurance for subcontractors will depend on three main factors, being your trade, the size of your business and the amount of cover you require.
Lower risk trades will generally pay less for their insurance than higher risk trades. An example of a low risk trade would be a residential carpenter, whilst a high risk trade could be a scaffolder.
The size of your business will also affect the cost, however anything below $100k in annual revenue will generally be the same price. Even an increase to $150k won’t affect it too much.
For a sole trader classed as a low risk the cost of $5 million public liability insurance can be as low as $450. For higher risks trades, higher business revenue and higher amounts of cover there is really no upper limit.
More information on subcontractors insurance can be obtained from your preferred broker or insurance provider.