Subcontractor Public Liability: A Guide for Builders
Most builders rely on subcontractors to get jobs done: electricians, plumbers, carpenters, concreters, plasterers, tilers and more. Each of them brings their own risk onto your site. If a subcontractor causes injury or property damage and doesn't have adequate insurance, the claim can end up landing on you and your policy.
That's why checking subcontractor insurance, and keeping proof of it, should be part of every builder's routine.
Why subcontractor insurance matters to you
When something goes wrong on site, the injured person or property owner may claim against everyone involved, including the builder or head contractor. If the subcontractor responsible has their own public liability cover, their insurer can respond. If they don't, or their cover has lapsed, you could be left defending the claim yourself.
It can also affect your own insurance. Many builders' public liability policies include conditions about subcontractors, such as a requirement that all subcontractors hold their own public liability cover at a minimum limit. If you don't check, and an uninsured subcontractor causes a loss, your insurer may limit or decline cover, depending on the policy wording. Read your policy conditions carefully, or ask us to go through them with you.
What is a certificate of currency?
A certificate of currency is a document issued by an insurer or broker confirming that a policy is in force at the date it's issued. It usually shows:
The insured's name and ABN
The insurer and policy number
The type of cover (for example, public and products liability)
The limit of liability
The period of insurance
Any interested parties noted on the policy
A certificate is a snapshot. It confirms the policy was current on the day it was issued, not that it will stay in force, so it's worth checking again before it expires.
What to check on a subcontractor's certificate
When a subcontractor sends you a certificate of currency, check:
The name and ABN match the business you've engaged. A certificate in someone else's name doesn't protect you.
The policy is current and won't expire during their work on your project.
The limit of liability meets the minimum in your subcontract and your own policy conditions.
The cover type is right. For most trades, you're looking for public and products liability. Some trades may also need professional indemnity.
The business description fits the work. If the policy describes a painter and they're doing structural work, the policy may not respond.
Any exclusions you know about, such as work at heights, hot works or certain types of construction. Ask your subcontractor, or ask us to help interpret it.
If something doesn't look right, ask the subcontractor's broker or insurer to confirm.
Set up a simple system
You don't need complicated software to manage this. A basic process could look like this:
Make current insurance a condition in every subcontract agreement, with minimum limits written in
Request a certificate of currency before a subcontractor starts work
Keep certificates in one place, such as a shared folder or spreadsheet, with expiry dates
Set calendar reminders to request updated certificates before expiry
Don't let a subcontractor back on site until a lapsed certificate is renewed
Other covers to consider
Public liability is only one part of the picture. Depending on the subcontractor and your contract, you may also want to check:
Workers compensation: if your subcontractor employs workers, they generally need their own workers compensation cover under the scheme in the state or territory where the work is done. In some situations, a principal contractor can have obligations for a subcontractor's workers if that cover isn't in place. Check with the workers compensation regulator in your state or territory if you're unsure.
Personal accident: sole trader subcontractors aren't usually covered by workers compensation for their own injuries.
Professional indemnity: for subcontractors providing design, engineering or certification.
Contract works: make sure your contract works insurance covers work done by subcontractors on your projects.
How we help builders and subcontractors
We work with builders right across Australia, by phone and email, to make sure their construction insurance and public liability cover fits how they actually work, including how they use subcontractors. We can explain the subcontractor conditions in your policy and suggest minimum limits for your subcontract agreements.
We also look after subcontractors. If you're a tradie who needs a certificate of currency to start a job, see our tradie insurance page. Once your policy is in place, we can issue certificates when you need them.
Talk to us
If you'd like a second opinion on your subcontractor insurance requirements, call us on (03) 9078 6473, email info@mminsure.com.au or contact us.
General advice warning: General advice only. This information is general in nature and doesn't take into account your objectives, financial situation or needs. Before deciding to buy or continue to hold any insurance product, consider whether it's right for you and read the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD), available from us or the insurer. Cover is subject to the terms, conditions, limits and exclusions of the policy.
M & M Insurance Services Pty Ltd ABN 54 664 837 138 is an Authorised Representative of Ausure Pty Ltd ABN 94 096 971 854 | AFSL 238433.
