Contractors Insurance

For contractors in the building industry, it’s important to know what insurance you need.

Trade Risk have been experts in contractors insurance for over a decade, and we’ve put together this comprehensive guide just for you.

If you’d prefer to speak with one of our experts or get straight into a quote, call us on 1800 808 800 or hit the orange button below.

Contractors come in all shapes and sizes.  You might be a contractor operating as a sole trader, or you might be a contracting company with 300 staff!

At Trade Risk we deal with contractors of all sizes.  Many of our clients are indeed sole traders needing just the basics, whilst we also have larger contractors with very complex needs.

Whilst the insurance needs of different contracting businesses will differ, the basics of contractors insurance remains much the same.

In this guide we’ll take a deep dive into the various types of business insurance required by individual contractors along with contracting companies.

Click the link to jump straight to that section.

• Types of contractors we can assist
• What insurance does a contractor need?
• Public liability insurance for contractors
• Personal accident insurance for contractors
• Contractual liability insurance
• Tool insurance for contractors
• Contractors business insurance packs
• Contractors insurance cost

If you’d prefer to speak with one of our expert insurance brokers, please call our friendly team on 1800 808 800.

Types of contractors we can assist

The short answer to this question is that we can assist virtually all contractors and contracting companies in the building and construction industry.

Some of the most common contractors we cover include the following:

• Electrical
• Plumbing
• Carpentry
• Painting
• Plastering
• Flooring

But essentially any form of contracting with within the construction and mining industry falls within our area of specialisation.

In terms of size, we look after thousands of sole traders and one-person companies operating as contractors, as well as larger contractors with dozens of staff.

Our team can assist contractors needing just basic public liability insurance for their contractors licence, through to full business insurance packages for larger and more complex operations.

What insurance does a contractor need?

As a contractor you take on a number of responsibilities outside of the hands-on work.

If anything goes pear-shaped on the job, you – or your company – can be held legally and financially liable for any losses that result from the issue.

This could be as minor as having a few tools stolen from your van, through to the far more serious cases where someone is critically injured or killed as a result of your business activities.

As the contractor you could be exposed to serious financial losses, so having the right insurance in place is absolutely vital.

There are a number of different types of insurance that a contractor will need, and a number of others that are highly recommended.

We’ll take a look at some of the most common forms of contractors insurance, with the aim of giving you a better understanding of what you actually need and what else is recommended.

Public liability insurance for contractors

This is the number one insurance type for any contracting business, especially in the trades and building industry.

Many contracts that you enter into will have a requirement for public liability insurance, and they may even stipulate a minimum amount of cover required.

If no minimum is stipulated you could go with the minimum available amount of $5 million, or the contract may set a higher amount of $10 million or $20 million.

Why do you need your own public liability?  It’s because as a contractor you are responsible for your own actions.  If your negligence results in property damage or personal injury to a third party, you are liable.

The company or person that you are contracting to may not be responsible, and on that basis their own public liability insurance would not cover any such claim.

This makes it vital for all contractor to have their own public liability insurance, not only because your contracts will often require it, but because without insurance you are exposing yourself to massive financial risk.

Personal accident insurance for contractors

As contractor or subcontractor you will generally not have access to sick leave, and depending on your business structure and the state you operate in, even workers compensation will not cover you.

This means if you’re unable to work due to injury or illness you’re going to be on your own.

Some companies you might contract to will recognise this risk, and will stipulate that all contractors must hold their own personal accident insurance or income protection.

Even if your contracts don’t have a requirement for personal accident insurance, is still a vitally important form of tradesman insurance.

The cost of personal accident cover can vary greatly depending on a number of factors such as your age, occupation, level of cover required and the options that you choose.

Whilst it is typically more expensive than public liability insurance, it is well worth it for any self-employed contractor.

Contractual Liability Insurance

As a contractor in the building industry, you will generally be entering into contracts with companies larger than your own.

These larger companies generally have plenty of money to spend on lawyers, resulting in contracts designed in a way that shifts responsibility away from them and onto you.

As a contractor trying to win contracts and get money in the door, you might overlook some of these types of clauses in your contracts.

They can be scary though, and what some of these contracts do is pass large responsibilities onto to you that you might not be expecting.

For example you might be undertaking a relatively small part of a much larger project, but the contract has you agreeing to take on responsibility for the entire project whilst you are on site.

You could end up being liable for a huge claim, even if you weren’t at fault.

Your public liability won’t cover such claims, as it only covers you when you are liable due to your own negligence.  It doesn’t cover you if you’re being held liable only because of the contract you signed.

What do you do?  You can’t stop entering into such contracts, as you need to keep generating work for you and your team.

This is where contractual liability insurance comes in.  It is designed to cover you and your business in the event that a claim arises and you are liable due to the contract, and not due to your negligence.

If you’re concerned about any of the wording in the contracts you have entered into, we strongly suggest speaking to your solicitor who will be able to review those contracts for you.

Whilst you might not be able to avoid some of the clauses in these contracts, you can at least protect yourself against them with contractual liability insurance.

Tool insurance for contractors

There is rarely any specific requirement that a contractor holds tool insurance, but it’s certainly a good idea for any tradie.

As a contractor you will generally be using your own tools on site, but the company you are contracting to is not responsible for your gear whilst it’s on their site.

If your gear is stolen on site, that’s your problem, the same as it would be if your tools were stolen from any other location.

Tool insurance can cover your tools for theft and a range of other risks, such as fire damage, or damage caused in a vehicle collision.

Regarding theft, it’s important to know that the tools are only covered if forced entry has been required to access the tools.

So if your tools are stolen from a worksite, but they were not secured within the worksite (in a locked tool chest for example) then you will not be able to claim.

Some insurers offer a policy commonly referred to as “open air” cover, however this is not the standard and the cost is considerably higher.

Contractors business insurance packs

We’ve covered off a couple of the most common individual forms of contractors insurance, but many larger contractors will require an insurance package.

Public liability insurance will form the cornerstone of the insurance pack, but there are a number of other forms of insurance that can be included depending on your needs.

These could include any of the following:

• Contract works insurance
• Professional indemnity insurance
• Commercial motor insurance
• Property & contents insurance
• Management liability insurance
• Statutory liability insurance
• Cyber insurance
• Any many more…

Not every contractor will need every type of insurance, but as your contracting business grows, it’s important to know what additional risks you are exposed to and what types of insurance could protect you.

Speaking with a qualified and experienced insurance broker is the best way to handle your insurance needs.

A good broker can ask the right questions about your business, analyse your needs and come up with recommendations.

Of course you don’t need to accept all of the recommendations, but at least you’ll know what’s available, and you can make an informed decision on what types of insurance you will opt for.

It costs nothing to speak with one of our knowledgeable Trade Risk brokers, and with over a decade worth of experience in dealing with contractors, we have the team to help.

Contractors insurance cost

The cost of contractors insurance can be anywhere from $500 to $500k!

The size of your business will have a huge impact, along with the following factors:

• Size of business (by revenue and/or staff)
• Occupation / business activities
• Work locations (especially if high risk / hazardous)
• Subcontractor use
• Claims history

Public liability insurance for contractors is typically quite cheap, but it will be heavily impacted by the factors listed above.

For a small contracting business (1-2 people) in the residential building industry, cover is available for most trades from around $600 per year for a basic $5 million public liability policy.

But if you’re a large electrical contracting business, say with 200 staff and undertaking work in locations such as mine sites and power stations, you’d be spending multiple hundreds of thousands on insurance per year!

For other forms of business insurance, such as property and vehicles, the insurance cost will vary mainly based on the value of assets you’re needing to insure.

Our Trade Risk brokers can put together a range of quotes for your business, to give you a much firmer idea of what you should be budgeting for your business insurance.

More Information

At Trade Risk we insure thousands of contractors in the building and construction industry.

Whether you need insurance for your electrical contractors licence, or for a big new contract that your plumbing business is taking on, we can assist with the right insurance.

Our team have won multiple industry awards and have become known as one of the leading insurance brokers for contractors and subcontractors.

For more information please call our friendly team on 1800 808 800 or complete our online quote request form.

We’re passionate about helping contractors with their business insurance, and we’d love to help you too.