This article is by Simon Pascoe at FDBeck Insurance Brokers – A specialist competitive broker service helping Owner Builders with their insurance needs.
Owner Builder construction insurance policies do not include personal injury claims imposed by Workers Compensation Law. Therefore because you are the Principal Contractor the risk must be separately covered under a specific workers compensation policy issued through a nominated licensed insurer.
Many Owner Builders make the mistake of thinking that because they don’t directly employ anyone then they don’t need workers compensation insurance. Like all insurance and like all legislation imposed by Government the devil is in the detail. It’s important to note that a contractor engaged by you, as the Owner Builder, may be deemed to be a worker under certain provisions of various legislation. Therefore it is highly recommended that Owner Builders seek a simple, basic (or casual) workers’ compensation insurance policy. You need to remember: As the Owner Builder you are the Principal Contractor and as such the buck stops with you. Make sure you are covered.
A common example is where as an Owner Builder asks a family member or friend who is a carpenter to work for them on weekends whilst they are building their new home. If the carpenter/family member or friend is employed by a propriety limited company during week days, then during this time they will be covered by their employers’ workers compensation policy. However their employers’ workers compensation policy will not extend to cover them whilst they are working for the Owner Builder on a direct basis and outside of their normal employment contract. In the event of a work injury on your site you will be liable for the workers compensation claim and will need to pay the damages.
Another example is when your contractor hires casual labour and then doesn’t insure them for workers compensation. Again as the Owner Builder you could be held jointly liable if there is an accident to that worker and you did not check with the contractor to ensure that sufficient cover was provided for that worker by the contractor.
The best protection is simply to make sure that you don’t leave yourself exposed as an Owner Builder. A minimum premium workers compensation policy can be taken out very cost effectively. Even if you don’t employ or plan to employ any staff we still suggest that you purchase a minimum premium policy. Workers compensation varies depending on which Australian State you are located in, but in most cases you may only be talking about a few hundred dollars.
For your convenience there is a list of contacts for each Australian State at Owner Builder Insurance.