As a contractor or subcontractor, you likely have public liability insurance, but you may not be entirely sure what the policy actually protects. This guide explains what contractor public liability insurance covers, the gap most contractors don’t realise is there, and if you’ve been injured while contracting or subcontracting in NSW, what compensation you may be able to claim.
What Is Public Liability Insurance for Contractors?
Public liability insurance is a type of business insurance that covers you if your work causes injury to another person or damage to someone else’s property. If a member of the public trips over your equipment, or a client’s property is damaged while you’re working on it, your public liability cover responds to the claim against you. It sits alongside the other business insurance most contractors carry, but, as you’ll see, it does a very different job from workers’ compensation insurance.
A few facts worth knowing, because they shape everything below:
- Public liability insurance covers third-party injury or property damage caused by your work.
- It is often required for site access, and many clients ask for proof of insurance before signing a contract.
- It is not universally required by law, but in practice, you often can’t win work without it.
- Claims can reach millions of dollars, so the cover exists to protect against legal liability costs that could otherwise put a business out of business.
In short, this liability insurance exists to protect other people from harm connected to your work, and to protect you from the cost of defending and paying those claims.
What Public Liability Insurance Covers
A standard public liability policy typically responds to:
- Third-party personal injury – someone who isn’t your employee is hurt because of your work.
- Third-party property damage – you damage a client’s or a member of the public’s property.
- Legal defence and legal costs – the cost of defending a claim brought against you.
- Settlements and compensation payable to the injured third party.
- Products liability – harm caused by a product you’ve supplied or installed.
What It Does NOT Cover
Here’s the point that catches contractors out: public liability insurance protects the public from you. It does not cover an injury to you.
Two gaps in particular are as follows:
- Your own injury and your own workers’ injuries are not covered. Public liability does not cover injuries to the insured’s own employees; that’s what workers’ compensation insurance is for. And it certainly doesn’t cover you, the business owner, if you’re hurt on a job.
- Financial loss from poor workmanship or advice is not covered. If a client loses money because of a mistake in your professional advice or service, that’s the territory of professional indemnity insurance, not public liability.
So having your own public liability insurance does not mean you’re covered if you get injured at work. Public liability is liability insurance for other people’s losses, not yours. That single misunderstanding is why so many injured contractors assume they have no options when, under NSW law, they often do.
Do Subcontractors Need Their Own Insurance and Public Liability Cover?
Usually, yes. Subcontractors typically need their own public liability insurance, and most head contractors and builders won’t engage a subbie without it. You generally can’t rely on being covered by the head contractor’s policy – their cover protects their business, not yours, and proper insurance coverage in your own name is what gets you onto the site.
If you run your own business as a sole trader or under an ABN, holding your own insurance is part of operating as an independent business. Carrying your own business insurance, including public liability, is simply part of running your own business.
But the same warning applies: subcontractor public liability insurance protects the people affected by your work. It does not cover the subcontractor’s own injury. So if you’re a subcontractor who’s been hurt, your own policy isn’t the answer – your compensation rights are.
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Injured While Contracting or Subcontracting? What You Can Actually Claim in NSW
Being a contractor or subcontractor does not automatically bar you from compensation in NSW. There are several pathways, and which one fits depends on your circumstances and how your work was actually arranged.
Are You a “Deemed Worker” under the NSW Workers’ Compensation Act?
NSW workers’ compensation law doesn’t only cover people on a standard employment contract. Under Schedule 1 of the Workplace Injury Management and Workers Compensation Act 1998, a contractor or subcontractor can be treated as a “deemed worker” – meaning that even though you call yourself a contractor, the law may treat you as a worker of the principal who engaged you, and you may be covered by their workers’ compensation.
Whether you’re a deemed worker depends on the substance of the arrangement, not just the label on your invoice. Consider whether:
- You work primarily for one principal rather than running a genuine business that serves many clients.
- The principal supplies the tools, materials or equipment.
- The principal controls how, when and where you do the work.
- The work is ongoing rather than a one-off job.
- You’re paid in a way that looks like a wage.
- You’re integrated into the principal’s business rather than operating independently.
If several of these apply to you, you may be a deemed worker and eligible for workers’ compensation through the principal, even as an independent contractor without your own workers’ comp insurance. This is a legal test, and it turns on the detail, so it’s worth getting advice before assuming you don’t qualify.
If You’re Not a Deemed Worker
If the deemed-worker test doesn’t fit your situation, you still have options:
- Common law work injury damages claim. If a negligent principal or head contractor caused your injury on an unsafe site, or if they failed to manage obvious risks, you may be able to bring a work injury damages claim against them.
- Public liability claim. If your injury was caused by the negligence of a third party (not you), you may have a public liability claim against that party – the same kind of cover discussed at the top of this guide, but this time you’re the injured person making the claim, not the policyholder defending one.
- TPD or income protection claim. If your injury stops you working long-term, you may be able to claim total and permanent disability (TPD) or income protection benefits through your superannuation. Many contractors hold this cover without realising it.
What to Do If You’re Injured as a Contractor
If you’ve been hurt on a job, a few practical steps protect both your health and any future claim:
- See a doctor and get the injury documented. Your medical records are the foundation of any compensation claim.
- Report the incident. Notify the principal or head contractor and make sure it’s recorded.
- Keep records. Hold on to your contract, invoices, evidence of who supplied the tools and controlled the work, and the details of any witnesses. This is the evidence that decides whether you’re a deemed worker.
- Don’t assume you have no rights because you operate under an ABN. As you’ve seen, contractor status doesn’t end the conversation.
- Get legal advice early. NSW compensation claims have strict time limits, and some are short. The sooner you understand your options, the more of them stay open.
Key Takeaways
- Contractor public liability insurance covers injury or property damage your work causes to other people - it does not cover an injury to you or your own workers.
- If you're injured as a contractor or subcontractor in NSW, your own public liability policy is not what protects you; your compensation rights are.
- Public liability, workers' compensation and professional indemnity each protect different people - workers' compensation is the one that responds when a worker is the injured person.
- Subcontractors usually need their own public liability insurance to win work, but it still only protects the public, not the subbie's own injury.
- Under Schedule 1 of the Workplace Injury Management and Workers Compensation Act 1998, an injured contractor may be a "deemed worker" and covered by the principal's workers' compensation.
- If you're not a deemed worker, other pathways may apply: a common law work injury damages claim, a public liability claim against a negligent third party, or a TPD/income protection claim through your super.
- See a doctor, document the injury and get legal advice early — NSW compensation claims have strict time limits, and being on an ABN doesn't automatically end your rights.
Burke Mead Lawyers Can Help With Your Personal Injury Claim
At Burke Mead, our experienced team can review how your work was actually arranged, tell you whether you’re likely to be deemed a worker, and explain which compensation pathway offers the best prospects. If you’ve been injured while contracting or subcontracting, talk to us before you assume you’re not covered.
