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Article on My tradesmen are fully insured, right? by adam

My tradesmen are fully insured, right?

Adam Weaver adam@allrisk.com.au
30-05-2017

Don't Worry, Mate, I'm "Fully Insured"

What does someone mean by that? What does "fully insured" actually mean?

... Not much, I'm sorry to say.

What is Tradesman Insurance?

Most tradesmen have business insurance for Public and Products Liability, Motor Vehicles, and possible Tools of Trade insurance.

Some may even have Workers Compensation for their workers.

A common misconception for owner builders is that as long as all contractors have their own insurance, the owner builder has nothing to worry about.

Wrong

The tradesman's insurance covers the tradesman only, it doesn't protect the owner builder.  Take public liability, for example, if the tradesman injures someone, the tradie's public liability insurance would be expected to step in and defend the tradie and pay compensation to the injured person. On a construction site however, the injured person will usually level their claim against the builder in charge of the site (in this case that means the 'owner builder').  

The owner builder is not covered by the tradie's insurance. Only your own insurance can respond to a claim directed at you.  The owner builder needs their own public liability insurance to protect against being sued by that injured person. Although it may be that the owner builder isn't eventually responsible, there will still be significant legal costs in defending the claim.

What About Workers Compensation?

Even if your tradesmen have workers' compensation insurance, it doesn't necessarily cover the tradesman himself - it probably only covers the workers of the the tradesman. If the tradesman is a Sole Trader or Partnership (i.e. anything but a Pty Ltd company), then in most states the tradesman cannot buy workers compensation for himself. Yet he may be deemed to be the worker of the owner builder.

Be very wary of other companies telling you that you don't need workers compensation insurance. It usually only means they don't (or aren't able to) provide workers compensation cover for owner-builders; by law no other insurance can cover the same risks as workers compensation. Public liability insurance can only cover the gaps - i.e. cover your liability to pay when it is not required to be insured under workers compensation legislation. Even if WorkCover in your state say that you don't need a policy, we urge you to make sure you have that in writing - because no-one can foresee what might go wrong, and the "not previously required" policy can actually turn out to be legally required. 

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