If you’re a contractor or subcontractor in Australia, public liability insurance isn’t a discussion. It’s a condition of getting on site, getting paid, and staying in business. The head contractor will ask for it before you pick up a tool. The principal contractor’s insurer won’t let you through the gate without it. And if something goes wrong and you don’t have it, the financial exposure isn’t limited to your business assets — if you’re trading as a sole trader, your house is on the line.
This guide covers the unique position contractors and subcontractors occupy in the PL insurance world: what you need, what the head contractor expects, where the liability chains run, and how to stay covered across multiple sites and projects.
The Contractor’s Position in the Liability Chain
Construction and contracting work in Australia operates on a layered liability model. At the top is the principal contractor or head contractor — the company that’s been engaged by the client to deliver the project. Below them are subcontractors — trades engaged by the head contractor to deliver specific packages of work.
The liability flows in both directions:
- Upward: If a subcontractor causes injury or damage, the head contractor is often named in the claim alongside the subcontractor. The head contractor’s insurer will want to recover from the subcontractor’s insurer.
- Downward: If a subcontractor is injured by another subcontractor’s actions, or their property is damaged by site conditions the head contractor created, claims flow in the other direction.
This is why PL insurance exists at every level. Every contractor on site carries their own policy, and every policy needs to meet the minimum standards the head contractor sets.
Why Head Contractors Demand It
When a head contractor’s insurer asks “who’s on your site?”, they’re not just being thorough. Every subcontractor without adequate insurance is a gap in the cover — a gap that, in the event of a claim, the head contractor’s own policy might have to fill.
The head contractor’s insurer will typically require that all subcontractors carry PL insurance at a specified minimum level, with the head contractor noted as an interested party on the policy. This gives the insurer a direct route to recovery if a subcontractor causes a claim.
If a subcontractor turns up without insurance, the head contractor has a choice: send them home, or accept the risk that any claim caused by that subcontractor will land on their own policy. Most experienced head contractors choose option one.
What Cover Level Do You Need?
The answer depends on what your head contractor requires, but the standard minimums across Australian construction are:
- $10 million for most subcontractors on commercial and multi-residential projects
- $20 million for subcontractors working on government projects, major infrastructure, strata-titled properties, or high-risk trades at scale
- $5 million for some smaller-scale residential subcontracting (though $10 million is increasingly the floor)
The head contractor’s contract documents will specify the required cover level. It’s usually in the subcontract agreement under a heading like “Insurance” or “Contractor’s Obligations.” If it’s not stated, ask — and get the answer in writing.
Important: The required cover level might be different for different projects. A subcontractor doing residential bathroom renovations might need $5 million. The same subcontractor doing a fit-out in a shopping centre might need $20 million. You need to match your cover to the highest requirement across your current projects.
Principal Contractor’s Insurance vs Your Own
One of the most persistent misconceptions among subcontractors is that the head contractor’s insurance covers them. It doesn’t — or at least, not in the way that protects you.
The head contractor’s PL policy covers the head contractor’s liability. It might also cover subcontractors in certain limited circumstances, but here’s the catch: the head contractor’s insurer will almost certainly seek recovery from you if a claim was caused by your work. Their policy covers the initial payout, but they’ll come after you to get their money back.
The only effective protection is your own PL policy, issued in your name, with adequate limits. When the head contractor’s insurer comes knocking, your insurer steps in. That’s the system working as intended.
The “Named Insured” Issue
Some head contractors ask to be noted as an “interested party” or “named insured” on your policy. This gives them visibility — they’ll be notified if your policy is cancelled or changed — and in some cases, it extends your policy’s protection to them for claims arising from your work.
Agreeing to this is standard in the industry and won’t typically affect your premium. Just make sure your insurer knows and endorses the policy accordingly. An undisclosed interested party can cause problems at claim time.
Contractual Liability: What Your Policy Covers and What It Doesn’t
Standard PL policies cover your liability at common law — that is, the liability that exists under legal principles of negligence and duty of care. They may not cover additional liabilities you take on through your contract.
For example: your contract with the head contractor might state that you indemnify the head contractor for any loss arising from your work, regardless of fault. That’s broader than common law liability, and your PL policy might not cover it.
Read the indemnity clauses in your subcontract carefully. If they go beyond common law liability, ask your insurer whether your policy covers the contractual liabilities you’re taking on. If it doesn’t, you might need a policy extension or different wording.
This is one area where a broker adds significant value. They can review your contract’s insurance and indemnity requirements and make sure your policy responds properly.
Working Across Multiple Sites and Projects
Contractors often work on several sites in a single week — sometimes several in a single day. Your PL policy covers you across all of them, as long as your business activities fall within the occupation description you gave the insurer.
What you need to watch is the cover amount. If Site A requires $10 million and Site B requires $20 million, and you only carry $10 million, you’re underinsured for Site B. The solution is straightforward: carry the higher amount. The premium difference between $10 million and $20 million is usually modest enough that it’s worth the expanded access to work.
Certificates of Currency for Each Project
Each head contractor or site manager will want to see your certificate of currency before you start. Keep a PDF copy on your phone and be ready to email it. Some head contractors use contractor management systems where you upload your insurance documents, along with your licences, inductions, and SWMS (Safe Work Method Statements).
If your certificate lists your cover amount as “$10 million” and the head contractor requires “$20 million,” you won’t get on site. Check the requirements before you quote the job, and make sure your cover is sufficient before you turn up.
Specific Risks for Different Types of Contractors
Construction Trades
Plumbers, electricians, carpenters, plasterers, painters, tilers — the classic trades on any construction site. The primary risks are property damage (water leaks, fire from electrical work, structural damage) and injury to other workers or members of the public.
Water damage deserves special mention. A plumbing leak that goes undetected can cause tens of thousands in damage before anyone notices. Electrical faults can cause fires that spread through a building. These are the kinds of claims that test a PL policy’s limits, which is why $10 million to $20 million cover is standard for trades on commercial sites.
Civil and Earthmoving Contractors
If you’re moving earth, digging trenches, or operating heavy machinery, your risks include damaging underground services, destabilising neighbouring structures, and causing injury through machinery operation. Insurers price these risks accordingly — civil contractors pay higher premiums than most trade contractors.
Underground service strikes are particularly costly. Hitting a gas main or a high-voltage cable can cause injury, evacuations, business interruption, and significant repair costs. Your PL policy covers the damage — but only if you’ve complied with the relevant regulations about service location before digging.
Cleaning and Maintenance Contractors
Commercial cleaners face a specific risk: after-hours access to client premises. You’re on site alone, or with a small team, in a building full of other people’s property. Damage claims — water damage from cleaning equipment, broken fixtures, scratched surfaces — are common. Premiums are moderate ($450 to $700 for $10 million), but the volume of claims in this sector is higher than many contractors realise.
IT and Communications Contractors
Data cablers, network installers, and AV contractors work in finished environments — offices, schools, hospitals — where the surrounding property is valuable and easily damaged. Drilling through a finished wall, pulling cables through ceiling spaces, and mounting equipment all carry property damage risk.
There’s also a unique exposure: if your cabling or equipment installation causes a network outage at a client’s site, the business interruption losses can be substantial. Standard PL policies may not cover pure economic loss not arising from physical damage. Check your policy wording carefully if your work could cause business interruption.
What Happens When Something Goes Wrong on Site
When an incident occurs on a construction site involving multiple contractors, insurers coordinate. The process is:
- The incident is reported to the head contractor, who notifies their own insurer.
- The head contractor’s insurer investigates to determine which party was at fault.
- The at-fault subcontractor’s insurer is notified and takes over the claim.
- If fault is shared — perhaps the head contractor’s site layout contributed to the incident — the insurers negotiate apportionment.
Your job as a subcontractor is to notify your insurer as soon as you’re aware of an incident, cooperate fully with the investigation, and provide any documentation requested. Don’t try to determine fault yourself. Don’t admit liability. And don’t pay for damages out of your own pocket without talking to your insurer first.
Frequently Asked Questions
Can I use the same PL policy for all my contracts?
Yes. A single PL policy covers all your contracting work, provided the work falls within the occupation description you gave the insurer and the policy’s cover amount meets each contract’s requirements. You don’t need a separate policy for each project.
What if I only subcontract to one head contractor?
You still need your own PL insurance. Even if you work exclusively for one builder, their insurance doesn’t cover you — and they’ll almost certainly require you to hold your own policy.
Do I need PL insurance as a labour-hire worker?
If you’re a labour-hire worker placed through an agency, the agency or the host employer’s insurance typically covers you for the work you do under their direction. But confirm this in writing. If you’re supplying labour as a business — sending your own employees to work under someone else’s direction — you need your own PL insurance.
What happens if a subcontractor I hire causes a claim?
If you hire a subcontractor under you, you’re the head contractor in that relationship — and their liability flows upward to you. Your PL policy should cover claims arising from subcontractors you’ve engaged, but check your policy wording. Some policies have exclusions or sub-limits for work performed by subcontractors. Always verify that any subcontractor you engage has their own PL insurance.
Is PL insurance tax deductible for contractors?
Yes. PL insurance premiums are a deductible business expense.
How do I prove I have insurance when I arrive on site?
A certificate of currency — a one-page document issued by your insurer confirming your cover is active. Keep it on your phone, in your vehicle, and in your email. Most insurers issue certificates instantly when you buy a policy and can reissue them on request.
Disclosure: This article contains general information only and does not take into account your individual circumstances. It is not financial advice or legal advice. Contractual and insurance requirements vary by project, head contractor, and jurisdiction. You should read the Product Disclosure Statement (PDS) for any insurance product before making a purchase decision. This site may earn a commission if you purchase insurance through affiliate links, including BizCover. This does not affect the price you pay.