Contractors Insurance – Have they got the right cover? Why a CoC is often not enough.
Become an Insurance Union client and we’ll review your contractors and sub-contractors insurance*
It’s crucial for businesses to ensure all their contractors and sub-contractors have appropriate insurance in place. Unlike employees, contractors and sub-contractors are independent companies with their own liabilities and insurance responsibilities. Unfortunately, insurance is not always top of the agenda for every business. It’s often viewed as complicated and expensive or with an “it’ll never happen to me” attitude. Contractors that are without broad, proper, and adequate coverage are taking needless risks and potentially exposing themselves to or passing on serious financial consequences to companies who have engaged them.
Most businesses engage contractors, some more than others however the construction industry is one of the more dominant sectors where up to 95% of construction costs can be contractors and sub-contractor payments. Certificates of Currency have widely been accepted as enough evidence of insurance, but is it enough? The short answer is no. Tier 1, 2 and 3 construction companies have been requesting policy schedules and wordings for years, employing risk managers to review cover before awarding packages to tendering contractors. Given a Certificate of Currency is generally a one page document confirming cover, it will never go into the details of cover, conditions or exclusions. Insurance Union fill this important gap in risk management and in most cases, we’ll review cover at no cost to you*.
In most situations, the head contractor or principal is responsible for insuring “The Works” and buys Contract Works insurance. The head contractor also buys Public Liability insurance to cover directors and/or employees against claims relating to injuries and/or damage to third parties and also to cover their site safety liability exposure. Workers Compensation is a compulsory (statutory) policy for any company in Australia that employs people as is Home Warranty for certain residential building contracts in most states. Statutory insurance requirements for home warranty and workers compensation vary by state, with variations on contract values and projects requiring home warranty as well as to who is deemed to be an employee for workers compensation claims. It’s important to check your statutory insurance obligations in your state or territory.
Insurance claims can be stressful, especially true with large losses which most insurers class as over $100,000. Imagine finding out after a claim occurs that your contractor or sub-contractor doesn’t have the right (or any) cover and has no cash reserves or assets for you to go after. If your policy or contract doesn’t protect you, you could be left footing the bill!
Insurance Union delivers on improving clients risk and relationships, both internal and external. We want our clients to feel empowered and at ease that they’ve partnered with an insurance and risk management advisor that provides tools for managing risks in-house, as well as providing advice on external party engagements (contractors and suppliers). Our aim is to make sure all parties in the supply chain are engaged properly and with adequate insurance so that in the event of a claim, your insurance and contract arrangements stand firm in protecting you and your business.
* Insurance Union can review your contractors and sub-contractors insurance with a proven model that comes at no cost to your business. Speak to one of our brokers today to find out more.
The information expressed in the article is general advice only and may not be in accordance with your needs. We recommend you contact an authorised insurance broker to receive personal advice regarding your specific needs. 13 April, 2022