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What Insurance Do Contractors and Subcontractors Need?

Contractors and subcontractors don’t enjoy all the same benefits as internal employees do, including insurance cover. So, if you’re working as a contractor, you may be wondering what type of insurance you need to have your back covered. Or, maybe you’re a business owner who’s wondering whether your contractors are adequately insured. Keep on reading to find out the essential insurance types needed for contractors.
Must-have insurance for contractors and sub-contractors
The two must-have types of insurance for contractors and sub-contractors are professional indemnity and public liability insurance. Both of these insurance policies need to be valid starting from the first day of work.
Next up, we’ll go over what each of these two types of insurance cover.
Public liability insurance for contractors
Public liability insurance is the first one out of the two types of crucial insurance for contractors. It covers damage to property and personal injury to other people. Here are some examples:
  • Damage or loss of goods
  • The employees of a contractor
  • Third-party injuries
  • Legal costs of a claim
Professional indemnity insurance for contractors
Professional indemnity insurance covers the business owner for legal liability relating to advice or services offered to clients. All contractors offering advice against a fee need professional indemnity insurance. Examples of contractors who can benefit from professional indemnity insurance include:
  • Graphic designers
  • IT consultants
  • Project managers
  • Business coaches and advisors
  • And more.
Why insurance is important for contractors
There is great financial risk in hiring an uninsured contractor, including litigation. Besides, there are legal risks at play. We’ve all seen news stories on businesses getting sued for millions of dollars! Not to talk about the risk to your reputation if an accident or injury were to occur without insurance cover. Don’t forget, in the age of social media information spreads fast!
There may also be other types of insurance that are relevant to a contractor, such as insurance against loss of income. However, public liability and professional indemnity are the most crucial.
Is your insurance up to date?
Whether you’re hiring a contractor or you’re the contractor being hired, both parties have a responsibility to ensure adequate insurance cover. It’s essential for everyone involved to take the necessary steps to manage risks before the work begins. This includes understanding what policies you have in place and what they cover. As a business owner, remember to ask contractors to present insurance certificates to you before commencing work. As a contractor, if the business hiring you claims their insurance covers you, ask to see the certificates as well.

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Management Liability insurance is designed to provide protection to both the business and its directors or officers for claims of wrongful acts in the management of the business.

Public Liability insurance is there to provide protection if someone makes a claim against the insured, the business or its employees.

Whether you’re hiring a contractor or you’re the contractor being hired, both parties have a responsibility to ensure adequate insurance cover. It’s essential for everyone involved to take the necessary steps to manage risks before the work begins. This includes understanding what policies you have in place and what they cover. As a business owner, remember to ask contractors to present insurance certificates to you before commencing work. As a contractor, if the business hiring you claims their insurance covers you, ask to see the certificates as well.
Talking to a professional insurance broker can help you feel more confident that you have the right kinds of insurance in place. If you need assistance with choosing the right insurance, the team at Norton & Co can help. With the right insurance policies and work processes in place, you can feel confident your business is covered if anything bad was to happen.
General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

All information above has been provided by the author.


Scott Norton, Norton & Co Insurance, ABN 11628176787, AFSL 239049

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