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If you’re working as a subcontractor (subbie) there are a number of different insurance types that you may need.
Public liability is certainly one of the most commonly required forms of cover, and in this guide we’ll run through the other requirements.
Am I a subbie?
This may sound like a silly question, especially since you’re reading an article about subbies insurance, but it still trips some people up.
We talk with many people who are unsure of whether or not they are a subcontractor, and therefore whether or not they require insurance.
So here’s the deal – if you have your own ABN and issue invoices for your work, then you are most likely a subcontractor.
If you do not have your own ABN, and you receive a regular wage with sick leave and holidays, then you are most likely an employee.
If you are still unsure of your status it’s best to speak with your accountant or whoever you are undertaking work for.
As a subbie there are certain responsibilities that you take on, such as paying your own tax and superannuation etc.
You also take on responsibility for your own work. This means that if something goes wrong you are financially liable yourself, rather than being able to rely on your employer to clean up the mess.
Furthermore, you no longer have the safety net of your employer providing you with sick leave, as you are only able to issue invoices for the work you have actually completed.
Workers compensation is not available to subcontractors in some cases depending on which state you live and work in, which can leave you further exposed financially.
Thankfully each of these areas can be protected against with insurance.
This is by far the most common form of business insurance required by subcontractors, especially in the building and construction industry.
Public liability insurance will cover you in the event that your work results in property damage or personal injury to another person.
For example if you put a ladder through someone’s window, or dropped a tile from a roof which struck someone in the head, your insurance would cover the costs of a claim against you.
In the case of the ladder through the window the costs involved may only be a few hundred dollars, but for a serious injury you could be up for tens or even hundreds of thousands of dollars.
Depending on your occupation the cost of public liability insurance is quite cheap, especially when you consider the level of protection offered.
For example a residential carpenter would only pay around $450 for $5 million worth of protection.
Whether or not public liability is actually mandatory for a subbie depends on your occupation and the organisations that you are subcontracting to.
Some small building companies won’t care about your insurance, but most will require that all subbies have at least $5 million in order to be allowed onto a worksite.
Even if the company you are subcontracting to does not require that you hold public liability, it is still a very good idea to protect yourself with the appropriate cover.
The second form of insurance commonly required by subbies is income protection.
As subbies do not have access to benefits such as sick leave or workers compensation, they need a way to protect their income if they are unfit to work.
Income protection can replace a large portion of your income (generally 75%) if you cannot work for a period of time due to injury or illness.
Not all companies will require that their subbies have income protection, but some will require a copy of your insurance before you’ll be allowed onto their worksites.
The cost of income protection can fluctuate wildly due to there being so many different options, but any good insurance adviser will be able to run through these with you to provide some quotes.
As with public liability insurance, even if the company you contract to does not have mandatory income protection requirements, it’s still a good idea to have some cover in place for your own sake.
There are other forms of insurance that are popular with subcontractors, but these are generally not mandatory in the same way that public liability and income protection can be.
For more information about these additional forms of insurance it is best to speak with an insurance broker who is familiar with your occupation or industry.
From this guide we have learned that whilst insurance is mandatory for some subbies, it really comes down to the company you are subcontracting to.
Just because you are doing work for a company that does not require insurance does not mean that you shouldn’t bother, and it certainly doesn’t mean they are going to protect you if something does go wrong.
The best option in almost all cases is to ensure you are properly insured in the event that something goes wrong.
We can assist you with additional information and quotes on each of the insurance types listed above.
Simply call us on 1300 542 245 or complete our online quote form which gives you access to a range of different insurance types.