Do Sub-contractors Need Insurance?

Dec 13, 2019
Reading Time: 3 minutes
Written by Taeisha Dou

As a sub-contractor, you are running your own business. It does not matter if you are hired by the main contractor, you are still responsible for your actions and that of your employees. There are things that can go wrong on jobs that can be costly – this is the main reason why sub-contractors need insurance.

Public liability insurance

Most construction sites will actually require that you have public liability insurance before you even sign a contract. This is because many sites are quite hazardous, and there are a lot of risks involved. You’ll find in many commercial contracts, there is a specific section allocated just to public liability insurance details.

Stores in a shopping centre work the same way. Tenants sign lease agreements not sub-contractor agreements, which is quite different. However, stores also need to have public liability insurance. This is because of the amount of foot traffic they get through their stores. If anything in the store was to fall and injure a customer, the store may need to compensate that customer.

One thing to remember though is that public liability insurance will only cover damage or injury caused to others. It doesn’t cover injury or damage suffered by you personally.

Income protection

As a sub-contractor, you will not have certain benefits as an employee would. Things like sick leave, annual leave, or bonuses are not part of your terms of hire unfortunately. Therefore, it is crucial that you have a policy in place to protect your income in case you are unable to work.

Income protection is usually not mandatory like public liability insurance. However, you may encounter some head contractors who require it. Getting this type of insurance is always a good idea in case something was to happen.

So why do sub-contractors need insurance?

As we can see, sometimes sub-contractors will need to get insurance to protect their business, but also in order to win a job. You might be asking, “why do I need sub-contractor insurance when my contractor already has a policy?” This is a common question and causes many sub-contractors not to get insurance at all.

There isn’t any double-up of insurance if contractor and you both have policies. Just as public liability insurance covers other people not yourself, the contractor’s insurance works the same way. If the contractor makes a mistake that ends up injuring you, their insurance will cover your costs. Effectively, you have all the trades covering each other.

When there is a personal injury claim, the compensation awarded could be hundreds of thousands of dollars. This is one of the biggest reasons why sub-contractors need insurance and is a small amount to pay now which will save yourself much more in the long run.


Income protection and public liability insurance may or may not be required in your next job by contract, but it is ideal to have nonetheless. It will protect you from having to fork out large amounts of money in the event of any accidents.

You should also always check that other workers on the job have insurance so that you are protected. To discuss these options further, you can always speak to an insurance lawyer.

Don’t know where to start? Contact us on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest lawyer marketplace.

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