As a tradie, do you enter into contracts that make you responsible for principal materials on site?

Tips

If you do, it’s important to make sure you’re aware of your obligations should something on your job go wrong.

Consider this case study published by Mecon Insurance, industry experts in construction and contractors’ plant:

A commercial electrician has an annual construction policy covering both material damage and public liability with a limit of $200,000, for any one contract, based on an annual turnover of $1,000,000 per year.

He was contracted to install two substantial transformers supplied by his client, ‘the principal’.

The contract value was within the policy limit of $200,000. The policy had an automatic 10% (of contract value) limit for principal supplied materials meaning only a maximum limit of $20,000 would apply if the worst happened.

During the installation work on site, both transformers were destroyed in a flood. The value of each transformer supplied by the principal was $1,000,000.

The $20,000 limit for principal supplied materials under the electrician’s policy was woefully inadequate to cover the value of the transformers making this a classic case of underinsurance.

The contract the electrician had entered into made him liable for the replacement value of the transformers. He has not informed his broker as to the value of the transformers, nor of his obligations under the contract.

If you’re a tradie and you enter into contracts as part of your work, make sure you liaise with your broker as to:

  • The value of principal supplied materials for each contract
  • The contract conditions and your obligations
  • If values exceed policy limits

Talk to your Phoenix Insurance Broker today about trade insurance and how to make sure you're adequately covered for all your contract obligations. Contact us at info@phoenixins.com.au or call 9367 7399. You might be very glad you did. 

tradesman on site

Category: Tips