Subcontractors insurance requirements
The first step towards self-employment for a tradie is generally subcontracting.
When you go from being on wages to subcontracting there are a few things you’ll need to do and be aware of.
Aside from tax and accounting issues, one of the big ones is insurance.
So what types of tradesman insurance does a subbie require?
Let’s take a look…
Mandatory insurance
There are two types of insurance that may be mandatory for subcontractors. These are public liability and income protection.
Not all work sites will have these requirements, and some will only require one or the other, but many sites require both.
Why are these insurances mandatory? We’ll take a look at each one separately.
Public liability
When you’re on wages you are covered under your employer’s public liability policy, so if you cause damage or injury to other person on site, their insurance will cover you.
But as a subbie you are on your own. Even you have someone else (“the boss”) instructing you, you will still be liable for your own actions.
So if your actions result in property damage or personal injury to another person, you need to have your own public liability insurance policy to cover yourself.
The cost of public liability for a typical tradesman is around $400 to $500 for $5 million cover, and this amount will be adequate for most residential work sites.
If you are working on shopping centres or other large projects you may be required to have $10 or even $20 million cover, however the cost doesn’t go up by a great deal.
Income protection
As a tradie on wages you will generally have access to sick leave as well as workers compensation, but once you switch to being subcontractor you’re on your own.
No sick leave or workers compensation means you could be in serious financial trouble if you injure yourself and are off the tools for a period of time.
Income protection insurance can fill this gap when you’re a subbie, ensuring that you have a safety net if something does go wrong.
The cost of income protection is generally higher than public liability, but for basic cover to get onto the work site the cost can be as low as $50 a month depending on your age and health.
Optional insurance
The two covers we’ve detailed above are the ones most commonly required to enter a work site, but there are a couple of other covers worth considering.
We won’t go into great detail (contact us if you want more info) but one of the most popular optional covers is tool insurance.
Tool insurance can cover the cost of replacing your tools if they are stolen from a secure location or damaged by fire or a vehicle collision.
For more information on tool insurance and what it covers please get in touch with us.
What if I take out no cover?
Some tradies don’t like the idea of being told what insurance they have to buy.
Many believe that if they’ve never had an incident in the past, then why should they have to pay hundreds or even thousands to take out insurance they don’t want?
It’s definitely a fair question, and it’s right to question these things when it’s your own hard earned money you have to spend.
Basically it’s all about protecting you and the people who rely on you. We may not like coughing up for insurance, but ultimately it’s for our own benefit.
At the end of the day, if you choose not to take out any trade insurance, you’ll have to accept that some work sites simply won’t let you work on them.Here at Tradesman Insurance we try to take the pain out of getting cover, both in terms of the cost and the time. Get in touch with us to see how we can help you.
