Contractor’s Insurance is crucial for all contractors and sub-contractors, and small businesses need to ensure it’s in place.
Is your insurance covering the subcontractors you use in your business? The answer is, ‘No!’
Contractors and sub-contractors take care of their own insurance – as opposed to the business owner having to provide coverage for them, as is the case with employees. But what if things aren’t quite that straightforward?
Contractor’s Insurance
Insurers do not include subcontractors under liability insurance policies. If they did this, the insurer then accepts the liability for all of the work the subcontractor undertakes.
The subcontractor could potentially cause an incident which results in property damage or an injury to a member of the public, and the subsequent insurance claim would be held against you, because they are an insured party under your policy.
Imagine subcontracting a treelopper who damages the roof of a house while removing the tree. What was a $1000 job results in $100,000 in damage.
It’s crucial for small businesses to ensure all contractors and sub-contractors have appropriate Contractors’ Insurance in place.
Check the paperwork
What policy?
That depends on the job, but a humble suburban tradesman will often have public and products liability, professional indemnity and workers’ compensation insurance.
The best way to ensure a subcontractor has their own cover in place is to obtain a Certificate of Currency from them. It will provide the information on their policy and can give you re-assurance they have cover relevant to the work you’re proposing.
Keep track
Your liability policy should also include an extension for Vicarious Liability.
Vicarious Liabilities can arise in situations where you are responsible for a third party (eg: the subcontractor or contractor working for you), and they are negligent in carrying out that responsibility and exercising control. If they are negligent, you may be deemed to be responsible for some of the property damage or bodily injury caused by the subcontractor or contractor. Vicarious Liability covers this exposure for you, so it is important to check your policy includes this extension.
Some key points to remember when dealing with subcontractors:
• Ensure all contractors are aware of their responsibilities and understand house rules
• Ensure records are kept up to date detailing contractors’ attendance at principal’s induction program
• Confirm all subcontractors or contractors have their own adequate insurance cover that provides indemnity for you by naming you as their contract principal
• Check the cover a subcontractor has in place includes sums insured that match your insurance cover and has no clauses that will pass the liability on to you, or exclusions that relate to the work you are performing, and
• Obtain and keep on file a copy of each subcontractor’s Certificate of Currency and diarise to ensure an updated certificate is obtained each year or for when new work is performed.
*Important note: this article provides information rather than financial product or other advice. The content of this article, including any information contained in it, has been prepared without taking into account your objectives, financial situation or needs. For more information or questions on subcontractors’ cover or your own policy, please contact Fitzpatrick & Co. Insurance Brokers on 03 8544 1636, email: insure@fitzpatrick. com.au or visit the website at fitzpatrick.com.au. Fitzpatrick & Co has specialised in the horticulture and arboriculture industry for over 30 years, providing assistance and financial support to companies, associations and events. We are there when your industry needs you.
