Does Public Liability Insurance cover subcontractors in Australia?

Public Liability Insurance may cover subcontractors, but only in certain circumstances. Coverage depends on how subcontractors are engaged, whether they are defined as contractors under the policy, and whether the insurer requires them to hold their own insurance.

Are subcontractors required to have their own Public Liability Insurance?

In most cases, yes. Many insurers expect subcontractors to hold their own Public Liability Insurance. Businesses often require certificates of currency to reduce risk and avoid gaps in cover.

What happens if a subcontractor causes damage or injury?

If a subcontractor causes injury or property damage, liability may fall on the subcontractor, the business engaging them, or both. If insurance arrangements are unclear, this can result in disputes, uninsured claims, or legal costs.

Does Public Liability Insurance cover labour hire or casual contractors?

Labour hire workers and casual contractors are treated differently depending on the policy wording. Some may be considered employees for insurance purposes, while others may require separate cover. This should always be confirmed with a broker.

Can I rely on my subcontractor’s insurance instead of my own?

Relying solely on a subcontractor’s insurance can be risky. If their policy lapses, excludes certain activities, or has low limits, your business may still be exposed. Having your own appropriate Public Liability cover helps protect your business.

How can a broker help with subcontractor insurance arrangements?

A broker can review your Public Liability policy, clarify how subcontractors are treated, ensure policy conditions are met, and help align insurance requirements with contracts. This reduces the risk of uninsured claims.

Does Public Liability Cover Subcontractors in Australia?

Public Liability InsuranceBusiness InsuranceSubcontractor

25 Feb

Written By Elle Williamson

If you engage subcontractors in your business, you’ve probably asked this question — or should have:

“Does my public liability insurance cover subcontractors?”

The short answer? Sometimes — but not always, and not automatically.

In Australia, public liability insurance can cover subcontractors in certain situations, but it depends on how your policy is structured, how the subcontractor is engaged, and whether the correct conditions are met.

This guide explains how public liability insurance applies to subcontractors, common gaps we see, and what business owners should check to avoid costly surprises.

What Is Public Liability Insurance?

Public Liability Insurance protects your business if a third party suffers injury or property damage because of your business activities.

Common claims include:

A customer slipping on-site
Damage to a client’s property while work is being carried out
Injury caused by tools, equipment, or completed work

For many Australian businesses — especially tradies, contractors, and service providers — public liability is essential and often contractually required.

Are Subcontractors Automatically Covered?

No. Subcontractors are not automatically covered under your public liability policy.

Coverage depends on:

Whether the subcontractor is considered a bona fide subcontractor
How they are engaged
Whether your policy allows for subcontractor activities
Whether specific conditions are met (such as written agreements or certificates of currency)

This is where confusion often arises.

When Public Liability May Cover Subcontractors

Your public liability policy may respond if all of the following apply:

1. The Subcontractor Is Working on Your Behalf

If the subcontractor is performing work under your direction, for your business, and as part of your contracted job, insurers may treat their actions as part of your operations.

2. Your Policy Allows Subcontractors

Many policies include cover for subcontractors — but often with conditions, limits, or exclusions. Some policies cap the number of subcontractors or require disclosure upfront.

3. The Claim Is Made Against You

Public liability typically responds when your business is held legally liable. It does not usually protect the subcontractor if a claim is made directly against them.

When Subcontractors Are Not Covered

Public liability insurance will usually not cover subcontractors when:

They are operating as an independent business
They have their own contracts and control their work
The claim is made directly against the subcontractor
Your policy excludes subcontractors or requires them to hold their own insurance
You failed to disclose subcontractor use to the insurer

In these cases, the subcontractor is expected to rely on their own public liability insurance.

Why Subcontractors Should Always Have Their Own Insurance

Even if your policy allows for subcontractors, relying on someone else’s insurance is risky.

Subcontractors should hold:

Their own Public Liability Insurance
Any required professional or trade-specific cover
Workers’ compensation (if applicable)

From a business owner’s perspective, this protects you from:

Gaps in cover
Disputes over responsibility
Delays in claims
Being left exposed if a subcontractor’s actions cause damage

A common requirement is to obtain and keep a Certificate of Currency for every subcontractor you engage.

Common Mistakes We See

Some of the most frequent issues we encounter include:

Assuming subcontractors are “covered under us”
Not disclosing subcontractor use to the insurer
No written agreements in place
Expired or missing certificates of currency
Policies that limit or exclude subcontractor work entirely

These mistakes often only come to light after a claim is lodged.

Public Liability vs Other Relevant Covers

It’s also important to understand what public liability does not cover:

Injuries to workers or subcontractors (workers’ compensation may apply)
Faulty workmanship (may fall under contract works or professional indemnity)
Advice or design errors (professional indemnity insurance)

This is why subcontractor arrangements should be reviewed as part of your overall insurance setup — not in isolation.

How a Broker Can Help

A business insurance broker can help by:

Reviewing whether your policy allows subcontractors
Confirming disclosure requirements
Advising on subcontractor agreements and insurance checks
Ensuring your cover aligns with how your business actually operates
Helping if a claim involves multiple parties

At Clutterbuck Insurance Brokers, we regularly help Australian businesses understand their exposure when using subcontractors — and structure cover to avoid grey areas.

So, Does Public Liability Cover Subcontractors?

Sometimes — but it should never be assumed.

If you engage subcontractors, it’s essential to:

Check your policy wording
Confirm disclosure requirements
Ensure subcontractors carry their own insurance
Review your cover as your business grows

If you’re unsure whether your current insurance setup is right, a review can help clarify where you stand before an issue arises. That’s where we come in. Reach out for a free review today.