Contractors Insurance

Whether you are a trade or professional contractor, when you provide a service for a fee, if things go wrong, you may be liable for any damages caused by your contracting business actions.

Fortunately, suitable insurance, including public liability for trade contractors such as plumbers, electricians, and cleaners, and combined professional indemnity and public liability for professional contractors such as IT, marketing, and HR consultants may provide protection and save self-employed contractors from much of the financial hardship.

One thing is consistent across the board. Self-employed contractors are responsible for obtaining their own business insurance.

Trade contractors have high business risks, including injury, liability, and more. Professional contractors’ risk being sued by the clients for faulty or negligent advice.

The team of friendly insurance brokers at Smart Business Insurance has been helping contractors determine suitable insurance for their business and are here to help you.

Many Business Owners are UNSURE if they are COVERED PROPERLY.
We help them find affordable and SUITABLE INSURANCE so they can run their business with CONFIDENCE.*

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What Insurance Do I Need as a Contractor?*

Self-employed contractors have risks that other business owners may never encounter.

There are health risks, such as getting injured on the job, that may prevent you from working for extended period.

And, there are also risks that affect third parties, such as your contracting work activities causing harm to your client’s person, damage to their property or loss of income or reputation to their business.

Some of the major types of business insurance covers available for contractors in Australia are explained below and include :

Public Liability Insurance
Professional Indemnity Insurance
Personal Accident Insurance
General Property and Tools
Commercial motor insurance
Plant & Equipment Insurance

Public Liability Insurance for independent contractors*

Public Liability Insurance coverage is essential for all self-employed contractors.

Public liability insurance for contractors may provide protection when there is injury or damage to a third party or third-party property, such as a client or the client’s property.

This coverage is the most crucial insurance trade contractors, and for some occupations, is required by law to get on site.

Public liability insurance in Australia typically provides self-employed contractors cover for:

Third-party injury to other persons – Where a contractors business activity causes harm to others. For example, a clumsy client trips over your tools or work area and hurts themselves.
Third-party damage to others property – Where a contractors business activity causes damages to others property. A contractor may accidently cause damage in a clients home while performing work.
Product liability – Where a contractors business products and goods supplied causes harm to others.

Public liability insurance coverage may protect self-employed contractors from claims that arise when others allege they are negligent.

A contractor’s public liability policy may provide a defence against the ensuing lawsuit when needed, and may pay the damages sought by the injured party.

Professional Indemnity Insurance for contractors*

Professional Indemnity Insurance in Australia, also known as errors and omissions insurance, is typically required for professional service contractors. This includes IT contractors, management consultants, business coaches, engineering contractors, project managers, marketing consultants and graphic designers, to name a few. These professional contractors require professional indemnity insurance because of the risk around the advice and services they provide.

If an independent professional contractor makes an error, such as providing incorrect information, makes an omission in due diligence, or provides advice that leads to damages or losses for a client, a client may seek damages from the contractor. Professional Indemnity Insurance may help these contractors stay in business by paying for legal defence costs, and for damages if awarded against them.

For instance, for IT contactors, if they did not conduct due diligence and installed virus-ridden software on your client’s computer, which caused their entire system to crash, your professional indemnity insurance may cover the claim.

Trade contractors should also consider professional indemnity insurance if they provide advice for a separate fee.

If you are a self-employed contractor and want to understand if professional indemnity insurance will provide suitable cover for your business activities, please call a Smart Business Insurance broker.

Personal Accident Insurance for self-employed contractors*

As a self-employed contractor your personal safety is your livelihood.

Personal accident insurance for contractors may provide cover for 52 or 104 weeks and upto 85%* of weekly income at the time of the injury ; depending on the amount of coverage agreed when the policy is taken out.

Time away from work from an accident will have a direct impact on a self-employed contractors income, and a long period away can negatively affect their savings, family and lifestyle.

Personal Accident Insurance may help self-employed contractors pay for essential bills and other financial commitments if they have an accident.

General Property and Tools Insurance for independent contractors*

As a contractor, you may have mobiles, laptops, tools and valuable equipment that allows you to do your job.

If your property is damaged or stolen, your business cannot operate effectively.

General property insurance can help you keep operating effectively. It can provide needed funds to replace such property if anything were to happen to it that could hurt your business.

Commercial motor insurance for self employed contractors*

Commercial motor insurance should be considered for contractors that drive their vehicle from site to site. Light trucks , cars, vans and utes may be covered .

Plant & Equipment Insurance for independent contractors*

Plant & Equipment Insurance may provide cover for self-employed contractors that operate equipment such as excavators ,plant , and forklifts.

Cover may provide contractors with protection for theft, damage, consequential loss , liability , road risk and machinery breakdown.

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What are the costs of Independent Contractor Public Liability Insurance?*

How much does public liability insurance cost for self-employed CONTRACTORS ?*

Key factors in determining how much Public Liability insurance will cost an independent contractor include:

The nature and scope of the contracting business. For example, the type of work performed by the contractor.
The contracting business turnover and size. For example, is the contractor a sole trader that does 100% of the work themselves, or do they employee a team of 4 subbies ?
Amount of insurance cover the contracting business needs. Liability starts with $5 million cover, $10 million is popular with many self-employed contractors , $20 million cover is needed for contractors that work for government authorities, large companies, on commercial sites or have a team of employees.

Public liability insurance cost for a self-employed contractor in a low-risk occupation such as painting with no previous claims, starts from around $550* or $55 per month for $5 million Public Liability Insurance.

*Important : the above is a guide only; pricing may vary significantly from the above based on the contracting business size, clients, experience, and business activities. For many contractors, where the risks are greater than painting , or that have employees, costs will be higher.

Contact a Smart Business Insurance broker for a quote on your contracting business activities.

What insurance do you need as an independent contractor in Australia? *

As an independent contractor in Australia, having suitable commercial insurance coverage is important to shield yourself and your business. The most common types of insurance for independent contractors include (not limited to):

Public Liability Insurance: It may cover you if someone gets hurt or their property is damaged as a result of your work activities.

Professional Indemnity Insurance: This is very important if you are consulting or offering professional services to your clients, as you may be protected from claims of negligence or errors.

Personal Accident and Illness Insurance: May cover the expenses of those who are not working due to injury or illness.

Workers’ Compensation Insurance: It is compulsory if you have employees, which means that it offers protection for workplace injuries

General Property and Tools Insurance : may provide cover for portable equipment like laptops and tools

What insurance should tradies have? *

Tradies, trade contractors, or tradespeople, need to have different kinds of insurance to shield themselves, their businesses, and their clients from any potential risks. Some key insurance policies for tradies include:

Public Liability Insurance: The insurance may cover claims for the property damage or the personal injury caused by your work activities

Tool Insurance: Your tools and equipment may be covered in case of theft, loss, or damage with this product.

Personal Accident and Illness Insurance: This protection may provide you with financial support if you’re not able to work because of an injury or illness.

Commercial vehicle Insurance: May protects your work vehicles against accidents, theft, and damage.

Why do subcontractors need their own insurance? *

Subcontractors also need their own insurance to protect themselves and their businesses against potential risks and liabilities. Although the primary contractor may be insured, it might not apply to the subcontractors or may not provide sufficient coverage for them.
Primary contractors typically require subcontractors to have their own commercial insurance , especially public liability insurance.

For subcontractors to protect themselves and their business in case of an accident public liability is a must. They should also consider other covers such as personal accident and tools insurance.

Do I need business insurance to work as a self-employed contractor in Australia?*

For some trade occupations, such as electricians and plumbers, in some states public liability insurance is required by law to get on site.

For many other trades , contractors will be required by their client to obtain their own public liability insurance to get on site. This is typical for contracting trades working for builders and for those that work for government authorities and large firms.

Many small business owners, and even retail clients, will also ask to see proof of a contractor’s insurance cover, called a certificate of currency, prior to awarding them work and ask for an update each year. This can apply for professional contractors too, with clients requesting proof of professional indemnity insurance .

As a self-employed contractor, business insurance may provide credibility and valuable protection against the cost of a claim too.

Why should contractors use an insurance broker in Australia?*

If you are a contractor deciding on whether to use an insurance broker for your business insurance it is important to consider that brokers act in the interests of the self employed contractor .

Direct insurers and agents act for the insurer. This can be important; especially if you need to claim.

Brokers can help contractors by sourcing competitive quotes on policy inception, negotiate with the insurance companies to prevent or limit increases on renewal, remarket your policy to other suitable insurance companies where appropriate, talk to underwriters about policy wordings, industry classifications and terms, talk to insurance assessors during the claims process and repairers where necessary.