Have you made sure your contractors and sub-contractors are properly insured? Hiring a contractor can be a convenient option for small business owners. One of the primary reasons being that they provide their own insurance. However, the quality of their insurance could be a major factor if the unexpected does happen.
For example, if your contractor’s insurance only provides cover up to half a million, and they happen to incur damages above that, then you may be left with a deficit that could ruin your business. Another thing to consider when hiring contractors is that they have all the relevant cover options for the work they are doing. If you hire a tradesman you should expect them to have adequate professional indemnity, worker’s compensation, contract works, property damage and public liability insurance.
How Do Employees And Sub-Contractors Differ?
Often we like to think that there are firm distinctions between employees and sub-contractors. However, in practice a worker can be deemed a sub-contractor for tax purposes, but an employee for worker’s compensation purposes.
Different states and territories have different rules delineating between employees and sub-contractors. If you are unsure what category your sub-contractor falls under, seeking legal advice beforehand is a sound option.
What Types Of Insurance Are Compulsory?
There are three main types of insurance coverage that contractors need to have when making repairs to your business. They are worker’s compensation insurance, public liability insurance and property damage insurance.
It is important to note that worker’s compensation insurance is compulsory across Australia for all employees. This also applies to any sub-contractors your contractor hires.
If your contractor does not have these types of insurance they could be putting your business at risk.
Have You Got Something In Writing?
The last point is to get something in writing. Getting contractors or sub-contractors to sign a contract before commencing work is the best way to secure both parties legally. Consulting with a lawyer to draft a contract that articulates the chain of liability and has a well thought out indemnity clause, in case of death, injury or loss, is crucial
No matter what the project, and however many precautions are put in place, there is always the risk of injury to other parties or damages to property. If you are an employer or sub-contractor please do not hesitate to get in touch with us to find out more.
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.