Guides

Public liability and workers compensation are the two policies businesses ask subcontractors for most often, and they're easy to mix up. One covers harm the subcontractor causes to other people and property. The other covers the subcontractor's own workers if they're hurt. Here's what to ask for.

Public liability insurance

Public liability covers the subcontractor if their work injures someone else, or damages someone else's property. That includes your clients, the public, and your own premises.

• Who should have it: almost every subcontractor who works on site or at a client's premises.
• What to ask for: a current certificate of currency showing the cover amount. Many businesses set a minimum of $10 million or $20 million, often because their own clients or head contracts require it.

Workers compensation

Workers compensation covers a subcontractor's employees if they're injured at work, including wages and medical costs. Each state and territory runs its own scheme with its own rules.

• Who should have it: any subcontractor who employs workers.
• The grey area: sole traders and some partnerships with no employees may not need it, depending on the state and how the work is set up. If a subcontractor says they don't need it, ask them to confirm that in writing and check your state regulator's guidance.
• Why it matters to you: in some situations, if a subcontractor's worker is hurt and their business isn't covered, a claim can come back to the business that engaged them. Rules vary by state, so get advice for your situation.

Not a substitute for each other

A big public liability policy doesn't cover the subcontractor's own workers, and workers compensation doesn't cover damage to your client's property. If the work needs both, ask for both.

Other cover worth asking about

• Professional indemnity for advice, design, IT, consulting and other professional services.
• Personal accident and illness for sole traders who don't have workers compensation. It isn't a legal requirement, but it protects them if they're hurt.
• Contract works for construction projects. This is usually held by the head contractor, not each subcontractor.

Then keep it current: how to track expiry dates.

This guide is general information, not legal or insurance advice. Rules differ by state and industry; check with your own adviser or the relevant regulator.