The Master Painter Australia - April 2016 Vol. 1 - Page 21

THE MASTER PAINTER AUSTRALIA 021 advised that it could prosecute and then the contractor would face large fines if found guilty (not much defence to the charges would be possible). On the other hand, a single person can create an incorporated company, that is a ‘proprietary limited’ company (usually abbreviated to ‘Pty Ltd’). Such companies must be registered with the Australian Securities and Investment Corporation (ASIC). Even if the person who starts the company is the only director and no-one else is employed, a workers compensation policy is essential because for the purposes of the law, a ‘working director’ is an ‘employee’. Public Liability Insurance is not mandatory by law, but almost every head contractor and most private clients will insist that a public liability policy for $20,000,000 is held. Any contractor in the construction industry needs that sort of cover to protect against the death or injury of a non employee and to cover against accidental damage to property. $20,000,000 is a large amount but a simple accident could create a major problem. Imagine the costs from dropping a heavy tool off from the second floor, with the tool bouncing out to land on the windscreen of a passing limousine, resulting in a smash which writes off the limousine and also two other cars, one of which demolishes the front of a building; six people sustain long term, serious injuries. The cost could easily run into millions of dollars. The vehicle insurers and the injured persons would no doubt sue the contractor for damages; if he did not have any, or enough, public liability insurance to cover the costs, they probably would sue the project head contractor. Lawyers tend to sue whichever party they think will have the resources to pay. Checking on Subcontractors It is important that a contractor checks that any subcontractor it engages has an up to date certificate of currency for workers compensation and public liability insurances. Insurance companies issue certificates of currency quickly but it is essential to check the date of issue and the duration of the certificate. contractor can be insured against theft or accidental damage. In some cases, with old plant and equipment that is of little value, there may be no point in insuring against theft or damage, but the fine print needs to be checked to ensure that third party damage caused by that plant or equipment is covered. Proud Supporter s of MPAL • Contract works in cases where the contractor is directly responsible to the client, the contractor may require cover against natural or malicious damage. • Product liability insurance may be needed if the contractor designs and/or constructs for a client. • Pollution insurance may be needed if any type of material is used which may accidentally cause pollution. • Surety and Contractual insurance can be obtained against the risk of the contractor not being paid due to the actions of the client, e.g., the client becomes insolvent. Also, bank guarantees, warranty bonds and the like may offer some form of protection against the contractor having payments withheld. These types of insurance require very close, expert checking of the fine print. In some cases the body providing the insurance can withdraw or change the terms just when it is most needed. There have been many instances of subcontractors commencing a project fully insured but failing to renew their policy (or simply running late with payment), during the life of the project. The hiring contractor needs an automatic system in place to bring up a reminder that the subcontractor must show that it has renewed its insurance policies, before any essential policy expires. Other Contractor Insurance There are many other form