Construction Insurance for Builders, Tradies, and Contractors Across Australia

These two covers are frequently confused but protect against completely different events. Contract works insurance covers damage to the physical project itself while it is under construction — if fire destroys a partially built home, or storm damage sets a project back three weeks, contract works pays to repair or rebuild the work in progress. Without it, the builder absorbs the full cost of restarting damaged work.

Public liability insurance covers claims made by third parties — a visitor injured on site, a neighbouring property damaged by falling debris, or a subcontractor's vehicle damaged by your equipment. Public liability responds to claims made against you by others. Contract works responds to damage to the project itself. Most builders and contractors need both operating simultaneously on any active project.

This is one of the most important questions any principal contractor or builder should ask — and the answer depends entirely on your specific policy wording. Many standard public liability policies do not automatically extend cover to subcontractors, particularly if they are unregistered or do not hold their own public liability insurance. If a subcontractor causes an injury or property damage and does not have their own adequate cover, the claim may fall back to the principal contractor's policy — and if the policy excludes subcontractor liability, the principal may be exposed.

Before signing contracts with subcontractors, confirm whether your public liability policy has a subcontractor extension. Your broker can also confirm whether the subcontractor's own policy provides adequate cover and whether a cross-liability clause is needed. See our dedicated page on what insurance subcontractors need before signing a construction contract for more detail.

The principal contractor typically takes out the contract works policy covering the whole project, but this does not mean subcontractors are automatically covered under it. A principal contractor's contract works policy may not extend to cover your work, your tools and equipment on site, or your liability for damage you cause to the project itself as a subcontractor.

Subcontractors should always confirm in writing whether the principal's policy covers their work scope before assuming they have protection. In many cases, subcontractors need their own contract works cover for their portion of the project, alongside their own public liability. The safest approach is to have your broker review the principal's policy schedule before work begins rather than discovering a gap at claim time.

Yes — workers compensation insurance is a legal requirement in every Australian state and territory for any construction business that employs paid staff. This includes full-time, part-time, and casual employees. Construction consistently records one of the highest workplace injury rates of any Australian industry, which makes workers compensation not only a legal obligation but a significant financial risk if uninsured.

Workers compensation does not cover working directors or sole traders — it covers employees only. If you are a self-employed builder or tradie, workers compensation does not protect you personally. Income protection insurance is the appropriate cover to replace your income if illness or injury prevents you from working. Obligations, premium rates, and declared payroll classifications vary by state — a broker advises on the correct scheme for your workforce and jurisdiction.

Construction insurance costs vary significantly depending on the trade, annual turnover, number of employees, project values, and the specific covers required. As a general guide:

Public liability for sole trader tradies typically starts from $600 to $1,500 per year for a $5M limit depending on trade type and turnover. Contact and higher-risk trades — demolition, roofing, scaffolding, crane operation — attract higher premiums than lower-risk trades. Contract works is typically priced as a percentage of the contract value, commonly 0.15% to 0.35% depending on project type, location, and build duration. Workers compensation is calculated as a percentage of declared wages and varies by state and industry classification.

The most accurate way to understand your cost is to have a broker compare across their insurer panel based on your specific business profile. See our construction insurance cost guide for a more detailed breakdown by trade and cover type.

Not every builder needs professional indemnity insurance — but more do than realise it. Professional indemnity insurance is specifically required if you are performing work under a Design and Construct contract, where you are responsible for both the design and the construction of the project. Under these contracts, any design failure can result in a PI claim against you even if the original design was provided by a consultant.

Even builders who have not signed a D&C contract can have a PI exposure if they provide design input, specification guidance, or product recommendations as part of their role. A builder who recommends a particular cladding system or waterproofing membrane and that product fails may face a PI claim for the advice provided. See our Design and Construction insurance page for a full explanation of when PI applies in construction.

Tool theft from vehicles is one of the most common construction insurance claims — and one of the most commonly disputed. Whether your tools are covered overnight in a vehicle depends entirely on your policy's theft conditions. Many tools and equipment policies require that tools be stored in a locked, enclosed vehicle with no visible sign of forced entry for an overnight theft claim to succeed. A smashed window qualifies. A pried-open toolbox lid may not.

Common conditions that affect tool theft claims include: whether the vehicle was garaged or parked on a public street, whether tools were in a locked toolbox within the vehicle, and whether the total claimed exceeds the policy's overnight vehicle theft sub-limit — which is often lower than the full tools sum insured. A broker reviews these conditions with you when arranging cover so you understand exactly what scenario your policy responds to before a theft occurs.

As a sole trader in construction, the minimum cover most sites and clients will require before you start work is public liability insurance — typically $10M or $20M depending on the principal contractor's requirements. Most sole traders also need tools and equipment insurance and a commercial motor policy for their work vehicle.

Because workers compensation does not cover you as a sole trader, income protection insurance is strongly recommended. If a back injury, hand injury, or illness prevents you from working, there is no employer sick leave and no workers compensation — income protection is your only financial safety net. If you have a mortgage or dependants, life insurance and TPD cover should also be considered alongside your business covers.

Most public liability and contract works policies arranged through a broker provide coverage across Australia as standard — so if your business works across state borders, you are covered at every location. Workers compensation is the exception. Workers compensation is a state-based scheme and each state has its own legislation, regulator, and insurer requirements. If your employees work across multiple states, you may need separate workers compensation coverage in each state depending on where the work is performed and where employees are based.

If you are expanding into a new state or taking on an interstate project for the first time, speak to your broker before the project starts to confirm your existing covers extend to that jurisdiction and that your workers compensation obligations are correctly structured for the new location.