Do I need Insurance for my Subcontractors?

You may think that your subcontractors are covered through your Public Liability Insurance policy but this is rarely the case.

It is important to understand your obligations as a business owner when it comes to using subcontractors.

Lets take a look at the type of subcontractors you are using.

Labour Only Subcontractors:

  • Work directly under your supervision and use equipment and materials that have been supplied by you.
  • They may work only for your business
  • Labour only subcontractors are often classed as an employee when it comes to Work Cover Insurance – we recommend that you check the work cover requirements with your state/ territory

Bona Fide Subcontractors

  1. Work without your supervision, supply their own materials and equipment and are responsible for their risk management
  2. They may specialise in a different area of work than your business – for example if you are a builder, you may bring in an electrician or a plumber
  3. Bona fide subcontractors are not classed as employees and would not be required to be covered under Work Cover

You must declare all subcontractor payments to your insurance broker


If my subcontractors have insurance, why do I need to advise my insurance company?

As a business owner it will be you that receives the letter of demand for any third party property damage or injury caused by your subcontractor.

Your liability insurer may be able to pass the cost of the claim to the subcontractors’ insurer but legal fees can add up fast.

It is also important to understand that if your subcontractor does not have any insurance in place your policy will not respond.

This is why it is crucial to ensure that all subcontractors have an insurance policy in place and that you keep a copy of their policy on your files.

If you have any questions and concerns about insurance for your subcontractors or if you would like a quote on your Liability Insurance, we are happy to help.

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