Many tradies figures once they take out public liability insurance, they are pretty well looked after if something goes wrong on site.

There are a few exceptions, such as having your tools knocked off or injuring yourself, which most people know are covered by tool insurance and income protection.

But when it comes to damage or injury to third parties, your public liability has you covered right?

Unfortunately not…

Often when people (including insurance brokers) talk about public liability, the use lines such as this:

“Covers property damage or personal injury to other people.”

And it does cover this, but there is a very important part that should always go on the end:

“As a result of your negligence”.

So yes your public liability covers you for property damage or personal injury suffered by a third party, but only where you have been negligent.

What do we mean by negligent?  Well basically it means that you (or your staff) were at fault.

You might think this is fine, because if you weren’t at fault, then it’s not your problem right?

Not if you’ve signed a contract that passes on responsibility…

Check your contracts!

If you’re signing contracts with big building companies or contractors, you will often find that they pass on responsibility wherever possible.

So via the contracts signed, the principal contractor may pass down responsibility to the contractor, who then passes down responsibility to the subcontractor.

Painters Insurance

In this case the subcontractor ends up taking on full responsibility, even for incidents where they were not at fault.


You’ve signed a contract as a subbie to undertake some electrical work.

Through no fault of your own, the electrical equipment to be installed is destroyed, resulting in a $50,000 loss.

Although you were not at fault, the contract has made you financial responsible for the loss.

Your public liability insurance will not pick up the tab as you were not negligent.

This is a nasty situation to get caught up in, but it can happen, and that’s why it’s so important to understand the contracts you are signing, and what responsibilities are being passed onto you via the contracts.

Contractual liability

Your public liability insurance isn’t going to help you in these cases where you are responsible due to contracts rather than negligence.

But there is another type of insurance which can help – contractual liability insurance.

Contractual liability insurance acts in almost the opposite way to public liability insurance for a subbie.

Public liability covers you where you have been negligent.

Contractual liability will not cover you where you have been negligent, but will cover you where you have been made responsible under a contract.

If you are signing contracts with the big builders and contractors, there is a good chance those contracts will pass on some level of responsibility, so it’s vital to be properly insured for this.

By having contractual liability insurance in place, you can rest assured that you will be looked after in the event that a contract makes you liable for someone else’s loss.

There are some exceptions to what is covered.  For example you won’t be covered for penalties under a contact, but this is typical of any type of insurance policy.

Do I need public liability and contractual liability?

Because both insurance types cover different risks, you may need both depending on the contracts you are signing.

But remember this – a public liability policy will never cover what a contractual liability policy covers, and a contractual liability policy will never cover what a public liability policy covers!

If you are entering into contracts we strongly recommend that you speak with an insurance broker, but here’s a basic rule:

All self-employed tradies (including subbies) will benefit from a public liability policy, regardless of whether or not you’re entering into contracts.

And if you are entering into contracts, especially with building companies, then you may benefit from having a contractual liability policy.

The best option is to speak with an insurance broker about your individual situation to see what combination of insurance policies is right for you.