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 forms of insurance available to specialist
contractors. The advice in this newsletter is general. Each
individual business must decide what it needs and w H