If you are a qualified tradesman such as a carpenter, plumber, electrician, or any other trade that is in demand, working as a subcontractor can be the right move.
You can be you own boss and spend your working day doing work you enjoy.
It is equally true that you are responsible for your own actions as a subcontractor.
You can be held liable and sued for injuries and property damage caused by your work activities, just like principal contractors.
It means that you will have to pay for claims against you out of your own pocket unless you have suitable business insurance.
That is why subcontractors require key covers like public liability insurance to protect themselves against claims against them for injuries to other people and property damage caused by their work activities.
Public liability insurance may come to your rescue if you cause personal injury to a third party or damage someone else’s property. A third party can be your client or anyone in the public.
Here is a rundown of some key benefits of public liability insurance for subcontractors:
Protection from Financial Troubles:
The key benefit of public liability insurance is that it can cover you against the cost of repairing property damage or paying for personal injury expenses caused by your work activities. Beyond that, it may cover the legal costs to defend yourself.
What happens if you do not have public liability insurance in place? It means that you must pay out of your own pocket.
Keeping Your Business Up and Running:
As a subcontractor, you need cash-flow to run your operations. From purchasing materials and tools to hiring some laborers to help you, there are typically a few ongoing expenses. You can plan for these.
But one large claim against you can put you out of business.
Not all people are forgiving and some even look for a small excuse to sue the service provider. Even defending yourself may require a lot of money and seriously harm your cash flow.
You may not need to worry about that when you have public liability insurance in place. That is how you can plan for a claim against you.
Required by Principal Contractors:
As you are liable for property damages and injuries to other people, you will be held financially responsible. You will not be covered by the principal contractor.
For this reason, many builders and property developers require subcontractors to have their own public liability cover as a condition of working on their building site.
This means that you can win more contacts than a subbie who is not insured. This way, you are one step ahead of some of your competition.
Ensuring Peace of Mind:
Having public liability insurance in place, can give you peace of mind against the many risks on the job. And this helps you to focus on your work activities and winning more jobs.
How to Choose Public Liability Insurance for Subcontractor
Choosing public liability insurance for a subcontractor may seem easy. There are many companies and insurers to choose from. However, it is important to make sure that the insurance covers your risks. Here is how…
- Ensure the coverage is based on ALL your work activities. For example, you may predominantly work as a painter but also do a little scaffolding – the scaffolding component of your work activities also needs to be covered.
- Check the level of cover and excesses. Is 5, 10, or 20 million dollars public liability cover suitable for you? Is $250, $500 or $2000 excess suitable for you? Consider your own risk appetite and check with a business insurance broker what are typical coverage and excess levels for your trade and size.
- Shop around for multiple quotes as the rates can vary from insurer to insurer. However, that does not mean you should settle for the cheapest cover that might not help you when you need to claim. The optimal solution is that you get multiple quotes to compare the premiums and policy features. A business insurance broker can help you with this.
- Check online reviews and the service quality of an insurer. It will make a difference when asking for help on a claim.
- Do not forget to read their fine prints or terms and conditions.
We hope this article has helped you understand the benefits of public liability insurance for subcontractors.
Having suitable insurance can be as important as having the right tools for a subcontractor.
What do you think? Let us know by commenting below.
*Important: Cover may be available subject to meeting insurers underwriting criteria. Some of the covers listed may or may not be available or may have limitations or exclusions. Cover inclusions vary significantly from insurer to insurer. DO NOT rely upon the above. Check your policy schedule carefully for inclusions and exclusions and limitations. Talk to a business insurance broker for more information.
Romit Malhotra is the brand representative of Smart Business Insurance, a leading Australian insurance broker. A big foodie, he loves to travel the world. Also, a diligent businessman, Romit likes to pen down his thoughts on related topics whenever he finds some free time.