Worker to Worker Liability Insurance is used to describe insurance where a sub-contractor causes injury or loss to another sub-contractor whilst working on the building site.
Worker to Worker Liability Insurance is not a special insurance, but rather an inclusion (and in some budget insurance policies, an ‘exclusion’) within a Construction and Public Liability Policy Wordings.
Sub-contractors insurance is broadly Public Liability for sub-contractors who are engaged to work on building sites, and protects sub-contractors against personal or property loss or injury against other parties (other than the sub-contractor), including the owner builder, non-employees working on site, neighbours and other parties.
Workers compensation protects Sub-contractors for injuries sustained by their own employees. It does not insure the owner builder from common law claims made by injured employees of sub-contractors. In today’s workplace environment (such as a building site) an owner builder could be exposed, should an injured worker, an employee of a Subcontractor, be able to demonstrate an injury was caused by, or partly caused by a breach of duty of care. In other words the injured person in a common law action (for example jointly with WorkCover, Medicare and the medical health insurers), seeking compensation and costs recovery, including from an owner builder as principal contractor.
It’s worth remembering, Workers Compensation only protects an employer for claims made by their own employees. It does not protect a principal against the common law claims made by injured contractors or sub-contractors employees.
An owner builder is the site controller, and site owner, and by definition is responsible to ensure all who enter the building site are appropriately qualified and insured for the tasks or works. An owner builder also retains duty of care to all who are engaged and their employees.
Owner Builder Construction Policies protects owner builders should they be ‘dragged or coupled’ to respond to a third party claim which is caused by a sub-contractor or their employees including claims or legal actions seeking damages (compensation) for personal or property loss.
Owner Builders should check any Construction and Public Liability Insurance Policy wording to ensure:
- Worker to worker claims are third party liability claim and made against the insured. Owner builders should check their Policy Exclusion and Conditions regarding personal and bodily injury does not restrict their protection.
- Review any implication of any exclusions regard breach of law or policy conditions including work place safety and regulations.
The difference between Contractor and Sub-contractor. The definition of contractor is “one that contracts to perform work or provides supplies”. General contractors are licensed for almost all phases of construction while specialty contractors are licensed for specific trades. A sub-contractor is defined as being an individual or business firm contracting to perform’ part’ of a building contract.
Choosing a Contractor or Sub-contractor
When choosing any contractor or sub-contractor check carefully for their licence details and accreditation’s. This should be easy to check with the relevant state or national authority. Choosing an unlicensed professional can end in disaster. If they are hurt on your premises, you will be held responsible. If the work is unsatisfactory or unsafe, you will also have no legal recourse.
It is a good idea to check with friends or family that have had similar work done to see if they were satisfied with the person that they used. Ask for references from the contractor or subcontractor themselves. It may be worth checking with your State or Territory Department of Consumer Affairs or Building Regulator to ensure that there have been no serious complaints against the tradesperson you are considering.
Owner builders should only engage sub-contractors on a contract basis – either a minor building working contract or major building works contract. These contracts are readily available from both the HIA and MBA.
Never sign the contract arbitrarily. Always read the contract carefully and ensure that the contractor is properly licensed and insured. If you don’t understand something on the contract, feel free to ask questions, or take the contract to a legal service or State or Territory Department of Consumer Affairs or Building Regulator.
If you want changes made, the contractor or sub-contractor should do so without hesitation. Ensure that the contract lists the specifics of the job, includes cleanup and debris removals, and clearly states any follow up or guarantees provided.
Subcontractors should be managed when on site – most do the right thing, some don’t. Either way an owner builder always remains the legal site controller and thereby responsible for all that happens on-site whether present or not.
Note: When taking out construction insurance make sure the insurance Policy protects you as the owner builder – and that you have protection against third party claims made against the sub-contractor.
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This post was written by Technical Underwriting Centre