When you bring subcontractors onto a project, you’re trusting them with your reputation — and potentially your insurance. Many head contractors assume their own policy will automatically cover subcontractors, but this is rarely the case.
Whether you’re managing large-scale commercial construction projects in Brisbane, complex residential builds in Sydney, or civil works across Perth and WA’s booming regional hubs, understanding how subcontractor insurance works can protect you from nasty surprises.
Why this matters to your bottom line
Imagine this: You’re a head contractor overseeing a $5 million warehouse build in Melbourne. A subcontractor accidentally damages a neighbouring property’s retaining wall. Their Public Liability Insurance has lapsed — and because your policy only covers you for vicarious liability (not their direct mistakes), you’re left managing the claim, paying excesses, and risking higher premiums next year.
A $15,000 incident suddenly costs your business far more in time, stress, and future premiums. This is exactly why having clear subcontractor insurance requirements is critical.
- Why subcontractors must have their own insurance
In almost every situation, subcontractors need to hold their own Public Liability Insurance — and in some cases Professional Indemnity or Contract Works cover — depending on the job they’re doing.
This protects them if their work causes damage, injury, or financial loss. Without their own policy, any claims could bounce back to you as the head contractor, even if you weren’t directly involved.
- Matching your requirements
Your subcontractor’s insurance should match the limits and requirements set out in your contracts. For example, if you carry $20 million in Public Liability cover, your subcontractors should hold the same.
Anything less could leave a gap that you — and your insurer — end up footing the bill for.
- Keep proof of cover — and keep it current
It’s not enough to check insurance once. You should:
- Request a Certificate of Currency before they start work
- Check the expiry date
- Update your records whenever the certificate is renewed
A subcontractor working without current cover can expose your business to claims and may even breach your contractual obligations.
“Always keep a current Certificate of Currency on file for every subcontractor. No proof = no job.”
- Tell your insurer about your subcontractors
Most head contractor policies exclude direct cover for subcontractors, but they can include vicarious liability — protecting you if you’re held responsible for something they do.
Your insurer will likely need to know:
- How much annually you pay to subcontractors
- The type of work they’re doing
- Whether they’re insured themselves
Failing to disclose this could impact a claim.
- What your policy may not cover
Every insurer is different, but many liability policies won’t:
- Cover the subcontractor directly for their own mistakes — the cover is usually limited to your vicarious liability if you’re held responsible.
- Pay for fixing defective work itself (although damage caused by defective work may be covered).
- Compensate for project delays or lost time.
That’s why it’s best practice to only engage subcontractors who hold their own insurance, keep current certificates of currency on file, and make sure your insurer knows who you’re using.
The bottom line
Subcontractors are part of almost every building project in Australia — from high-rise construction in Melbourne to civil works in Queensland’s booming Sunshine Coast and Gold Coast regions.
Making sure they have their own insurance, keeping proof of cover, and confirming your own policy includes vicarious liability is one of the simplest ways to protect your projects and your business.
If you’d like us to review your current policy and subcontractor arrangements, our team can help ensure you’re fully covered and compliant — anywhere in Australia.
