Insurance for Australian Building Contractors

There are a number of insurances available for builders in Australia. Some of these cover public damages, some personal damages and some that cover both types. Some are mandatory while others are optional. Regardless of the type, they are designed to safeguard against all the potential risks that contractors face daily in their construction works. This is why building contractors should acquire insurances as soon as they enter a new venture.

Types of Insurances Available

Below is a list of insurances that cover all the major and minor risks that expose contractors to potential financial damages.

  • Public liability insurance
  • Builder’s tool insurance
  • Income protection insurance
  • Life insurance
  • TPD insurance
  • Trauma insurance


What the Insurances Cover

The names of the insurances give some idea about the grounds they cover. They are discussed below with important details.

Public Liability Insurance

Public liability insurance is a mandatory and the most common type of insurance acquired by building contractors. Any licensed builder in any of the Australian states is bound to acquire these. Public liability insurance covers both property and personal damages caused BY the construction works. Property damage covers both minor claims that cost about $500 and major claims like the complete destruction of a household/building. Likewise, personal damage covers minor claims like tripping and spraining ankle(s) and major claims like death of an individual.

Tool Insurance

Builder’s tools are not only important but they can be very expensive based on the type. Tool insurance policies cover the expenses incurred due to theft or damage of tools from a secured location. However, some policies cover such conditions that occur in non-secure locations as well but naturally they cost more than regular policies. The type and covered field usually differ from one company to the other.

Income Protection Insurance

This is possibly the most important type of insurance that can be acquired by a self-employed building contractor. Such a builder cannot earn unless they work since they are not covered by sick leaves and similar benefits. Although these insurances differ based on the issuer as well, they usually cover up to 75% of a holder’s income in case of sickness or temporary disability. One important thing to keep in mind is that Income Protection Insurance and Sickness and Accident insurances are not the same even though they have some similarities.

Life Insurance

Building industry involves high capital intensive operations that naturally come with quite a high rate of debt for the contractor. Builder’s life insurance is for the immediate nominee(s) who might have to pay off the debts in case the original holder (the contractor) dies.

TPD Insurance

TPD insurances are quite similar to life insurances but they only pay out when the holder becomes completely and permanently disabled.

Trauma Insurance

These insurances are not that common since they are not directly related to “on-sight” damages. They cover grounds such as covering medical expenses for conditions similar to strokes and heart attacks.

Importance of Insurance

Insurances are important for obvious reasons.

  1. They cover expenses that could take massive toll and cause permanent damage to contractor’s financial condition
  2. Cover the grounds that people don’t usually foresee
  3. Brings financial stability by eliminating potential bumps
  4. Secures the future of the holder’s family
  5. Creates an efficient working condition


Why Insure?

Truthfully the question is not why and if but which. One can easily see how important it is for Australian building contractors to acquire one policy or the other, because people don’t only live for today but for a better tomorrow as well.