Many builders in Australia start with public and products liability insurance, because clients, principal contractors and building contracts commonly ask for it before work starts. Many also arrange tools of trade, commercial motor and workers compensation insurance.
Builder insurance is usually a set of separate covers, each linked to a different risk. Residential builders may also have home warranty obligations under their state's scheme.
Cover depends on the policy and insurer you choose. Check the policy wording and its terms and conditions for what is and isn't included.
What does builder insurance cover?
Builder insurance commonly combines liability cover, cover for your tools and vehicles, and cover for the works under construction. The table shows which builder insurance cover commonly comes up for each risk.
| If this happens |
Insurance to consider |
What it is designed to cover |
| Someone is hurt or their property is damaged in connection with your work |
Public and products liability |
Claims about injury or property damage connected with your business |
| The works are damaged by fire, storm or theft before handover |
Contract works |
Insured damage to the works under construction, such as materials and partly built work |
| Your tools are stolen from a locked site container or vehicle |
Tools of trade |
Theft of or damage to your tools and equipment, depending on the policy |
| Your ute or truck is in an accident |
Commercial motor |
A vehicle used for business |
| A worker is hurt on the job |
Workers compensation |
Injury or illness of your workers, under the state or territory scheme |
| A client says your design work cost them money |
Professional indemnity |
Claims that your advice, service or work caused a client financial loss |
| A homeowner is left with incomplete or defective residential work |
Home warranty (state scheme) |
Homeowners, under the rules of each state's scheme |
Swipe left or right to see the full table.
Each cover is subject to the policy terms, conditions and exclusions.
What does public liability insurance cover for builders?
Builder public liability insurance is designed to cover claims that someone was injured or their property was damaged in connection with your business. Products liability insurance is designed to cover claims that a product you made, sold or supplied caused injury or damage after it left your hands.
The two are usually arranged together as public and products liability insurance. Public and products liability cover may include legal defence costs, compensation and any settlement you are legally liable to pay, subject to the policy terms.
The specified limit is the most the insurer may pay, subject to the policy terms. The building contract or principal contractor commonly sets the minimum requirement. An upcover representative or a broker can talk through what those limits mean for your business.
Does public liability insurance cover my subcontractors?
Builders commonly ask subcontractors to hold their own public liability insurance, because a builder's policy is generally arranged for the builder's own business. Whether a policy responds to work you pass to subcontractors varies between policy wordings, so always check with your broker or the team at upcover.
What is contract works insurance for builders?
Contract works insurance is designed to cover the works under construction, such as materials and partly built work, against insured damage during a project. In Queensland, the QBCC says contract works insurance "applies throughout the construction period until handover".
Whether the builder or the owner arranges contract works cover is commonly set by the building contract.
Do builders need home warranty insurance?
Home warranty insurance is a statutory scheme for residential building work, and the rules differ by state. Home warranty cover is designed to help protect homeowners rather than the builder.
The NSW Government describes home building compensation cover as protection for homeowners "as a last resort if you cannot complete building work or fix defects".
| State |
Scheme |
When builders need it |
Source |
| New South Wales |
Home building compensation cover through the Home Building Compensation Fund (HBCF) |
"Licensed contractors that take on residential work over $20,000 need insurance cover through HBCF" |
icare HBCF |
| Victoria |
Domestic building insurance (DBI) |
"legally required for all domestic building projects over $16,000" |
Building and Plumbing Commission |
| Queensland |
Queensland home warranty insurance |
"Most residential building work in Queensland valued at more than $3,300", including materials, labour and GST |
QBCC |
| Western Australia |
Home indemnity insurance (HII) |
"Residential building work over $20,000 must be covered by home indemnity insurance" |
WA Government |
| South Australia |
Building indemnity insurance |
Building work contractors "must arrange and pay for building indemnity insurance" for domestic building work the scheme applies to |
SA Government |
Swipe left or right to see the full table.
For Tasmania, the ACT and the Northern Territory, the arrangements differ, so check with the building regulator where you work.
Do builder licences come with insurance conditions?
Builder licence rules, including any insurance conditions, differ by state, so check with the licensing body where you work. Our licence guides explain contractor licences in NSW and whether a carpenter needs a builder's licence. Electricians can read whether an electrician can get a builder's licence.
What does tools insurance cover for builders?
Tools of trade insurance is designed to cover the tools and equipment builders use for work, against theft and accidental damage, depending on the policy. Theft cover commonly needs evidence of forced entry into a securely locked vehicle, container or building.
Lower-value tools may be insured as a group. Higher-value items, such as a laser level or generator, may need to be listed with their value.
Does commercial motor insurance cover a builder's ute?
Commercial motor insurance is designed to cover a vehicle used for business, such as a work ute or delivery van. Options commonly include comprehensive, third party property damage, and fire and theft.
A personal car policy may not respond if the vehicle is used regularly for business, deliveries or carrying tools. Tools inside the vehicle are commonly insured under a separate tools of trade policy.
Do builders need workers compensation insurance?
Workers compensation insurance is required where workers fall within the relevant state or territory scheme, according to Safe Work Australia. Safe Work Australia says "There is a scheme for each state and territory".
Who counts as a worker, and any exemptions, depend on your state or territory scheme. Our guide to workers compensation insurance explains how the schemes work.
Do builders need professional indemnity insurance for design work?
Builders who take on design-and-construct work, where the builder is also responsible for the design, may come across professional indemnity insurance. Professional indemnity insurance is designed to cover claims that your advice, service or work caused a client financial loss. It may include legal defence costs, compensation and any settlement you are legally liable to pay, subject to the policy terms.
Public and products liability insurance is designed to cover injury to a person or damage to their property. Whether professional indemnity, public liability or both respond depends on what the client alleges, the policy wording and the insurer's assessment.
Whether a public liability policy responds to claims connected with design work varies between policy wordings, so always check with your broker or the team at upcover.
What do claims look like for builders?
The examples below come from upcover's construction insurance page. The first two involve a third party claiming against the business. The tool theft example is a claim on the builder's own tools of trade policy.
Hypothetical example: injury to others
A construction site is temporarily left unattended when a delivery arrives. A loose temporary barrier shifts, allowing a visitor to enter the site and trip over uneven ground, resulting in an injury and medical expenses.
How cover may respond: Public Liability is designed to cover claims for third party injuries due to an accident caused by your business operations, including reasonable medical expenses any settlement or compensation.
Hypothetical example: client property damage
During a residential build, a subcontractor accidentally damages an existing retaining wall while operating machinery on a work site. The wall partially collapses, causing damage to neighbouring property and requiring urgent repairs. The homeowner makes a claim for the repair costs.
How cover may respond: Public Liability Insurance may respond to third party property damage claims arising from your business activities.
Hypothetical example: tool theft
Tools and equipment are secured inside a locked site container overnight. Thieves force entry and steal power tools and equipment, causing delays to the build and unexpected replacement costs.
How cover may respond: Tools of Trade is designed to cover theft of tools and equipment from a securely locked container or premises where this is evidence of forced entry, subject to policy terms and conditions.
Important: Claims scenarios are hypothetical examples only. Cover is always subject to policy terms, conditions and exclusions. Policy wordings may also vary between insurers. Always refer to the policy wording and its terms and conditions for details.
When to notify your insurer and make a claim
If you're concerned about a particular customer service or experience, you can always consider telling your insurer as soon as you become aware of an incident, complaint or circumstance that could lead to a claim. You don't need to wait for a formal demand. Also keep in mind that notifying of a claim late may affect your claim.
You can start a claim through the make a claim page. Admitting liability, incurring costs or agreeing to a settlement before you notify your insurer may affect your claim. Starting a claim does not confirm that your claim is covered; your insurer assesses it under the policy terms, conditions, exclusions and limits.
What do builder insurance policies commonly exclude?
Builders insurance policies commonly exclude fixing your own work, theft without forced entry and risks that belong under another cover.
Public and products liability
Exclusions commonly include, but are not limited to:
- damage to the exact property you are working on, such as a window you are fitting
- liability arising from using a registered motor vehicle
- the cost to redo, correct or improve your own work or fix defects, although the policy may respond to resulting damage to someone else's property
- liability you take on under a contract that would not otherwise exist under the law
Tools of trade
Exclusions commonly include, but are not limited to:
- wear and tear, or breakdown
- damage from a power surge
- theft from the open air or without forced entry, such as from an open job site
Commercial motor
Exclusions commonly include, but are not limited to:
- claims where the driver is over the legal alcohol or drug limit, or refuses a test
- intentional or deliberate damage
- mechanical breakdown and wear and tear
- claims where the driver is unlicensed
Workers compensation
What a workers compensation policy excludes depends on your state or territory scheme.
Exclusions commonly include, but are not limited to:
- exemplary or punitive damages, which a court may award on top of other damages as a punishment
- damages claims brought against you outside Australia
Important: This list is not exhaustive. Exclusions vary between insurers. Always refer to the policy wording and its terms and conditions for the exclusions that apply to you.
How upcover can help
upcover arranges public and products liability, tools of trade and commercial motor insurance for builders and construction businesses. upcover works with 80+ insurance partners and can arrange quotes from a range of insurers.
- 70,000+ businesses covered
- 4.9/5 customer rating
- Certificate of currency available once your policy is confirmed
Get a quote for builder insurance.
Frequently asked questions
Is public liability insurance compulsory for builders?
Public liability insurance is not a general legal requirement for builders in Australia, but clients, principal contractors and building contracts may set their own insurance conditions. Licence conditions differ by state, so check with the licensing body where you work.
Who pays for home warranty insurance?
Home warranty insurance is commonly arranged by the licensed builder or contractor under the state scheme. In Queensland, the QBCC says the premium "must be built into the contract price" for residential building work.
Does builder insurance cover defects in my own work?
Public and products liability policies commonly exclude the cost to redo, correct or improve your own work. The policy may respond to resulting damage to someone else's property, subject to the policy terms. Home warranty schemes are a separate statutory protection designed to help protect homeowners.
Do sole trader builders need workers compensation insurance?
Workers compensation insurance applies to workers who fall within your state or territory scheme. Business.gov.au says "If you're a sole trader, workers compensation insurance doesn't cover you". Personal accident and sickness insurance is designed to provide benefits if injury or illness stops you working.
What is the difference between a carpenter and a builder?
A builder commonly runs the whole job and contracts with the owner, while a carpenter commonly works on the timber parts of a build. Licence rules for each differ by state. Our carpenter insurance guide explains the covers carpenters commonly arrange.
How much does builder insurance cost?
Builder insurance cost may depend on factors including your business activities, turnover, number of workers, location, claims history, specified limit and excess. An upcover representative or a broker can talk through a quote for your business.
The information in this article is general information only and does not take into account your objectives, financial situation or needs. It is not legal advice. Home warranty schemes, workers compensation schemes and builder licensing requirements are set by each state and territory and can change, so confirm what applies with the relevant scheme or regulator. Before deciding whether a product is right for you, read the policy wording and its terms and conditions. For commercial motor vehicle insurance, also read the Product Disclosure Statement (PDS), Target Market Determination (TMD) and Financial Services Guide (FSG). upcover arranges insurance products with selected insurers and underwriters and does not compare all general insurers or insurance products available in the market.
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