Insurance policies are full of terms and jargon that can be difficult for business owners to understand and apply to their own real-life situation. These terms can often be vital parts of policies that determine whether you are covered in the event of a claim or not.‘Faulty Workmanship’ is one of these terms. Tradesmen across Australia are often left wondering whether they are covered for Faulty Workmanship under their Public Liability policy.
It’s important to note that claims for public liability, especially those involving faulty workmanship, are all judged on the specific circumstances and will be reviewed by the insurer on a case-by-case basis. While we cannot tell you which specific claims would be covered and which wouldn’t, below is a guide to the fundamentals of Faulty Workmanship and Tradesman Insurance.
What is Faulty Workmanship?
While tradesmen take every precaution to complete each job to a high standard, mistakes are a reality of life.
Repairing defective work is going to be necessary for every tradesman at some point. But if that defective work results in property damage or personal injury to another person, this becomes more complicated. If you are found to be liable for damage or injury to a 3rd party, costs can add up quickly – and can be high enough to cause bankruptcy. As such, it is vital that tradesmen have appropriate insurance in place to protect their business and personal finances.
Is Faulty Workmanship Covered Under Public Liability Insurance?
Certain aspects of faulty workmanship will be covered under a tradesman’s Public Liability Insurance policy. Again, each case is different, but in general terms, costs incurred as a result of property damage or personal injury caused by faulty workmanship will be covered.
Most Public Liability policies will not cover the costs associated with rectifying the faulty workmanship, regardless of whether this work is taken out by your own or another business.
Minimising Your Risk of a Faulty Workmanship Claim
While mistakes are inevitable, there are certain precautions you can take as a tradesman to help you preserve your reputation and your business, such as:
- Be clear with your customers from the start about the scope of work you are completing
- Be sure to communicate and document any changes that occur throughout the completion of a project
- Upon completion, verify with the customer that work has been completed to their satisfaction
- If there are any disputes, try to work together with your customer to address them appropriately. Consider options such as refund, repair or replacement.
- Notify your insurance advisor if you have a loss
- Know the terms of your insurance policy. Contact your insurance agent if you have questions regarding your coverage you have.
Faulty workmanship and defective work can be a confusing area of insurance. Speak with your insurance adviser if you have any queries about what you are covered for.
Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.
The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.