Make sure you protect yourself

By far, the most common topic we discuss is workers compensation insurance for owner-builders.

Why? Why do we harp on and on about it when some of our competitors try to claim that it is completely unnecessary for owner builders?

It's certainly not because we enjoy talking about the topic. It's complicated (I'm sorry - it is) and it takes a lot of time to explain properly.

The major reason is that whether you want to believe this or not, owner builders may be considered to be the employer of workers within the terms of your state's workers compensation act. Not employees, but workers. There is a difference.

We're not trying to "upsell" you - if you don't want the insurance, then please don't take it. But listen to our advice about the risks you face (and double check with your state's regulator -- but just get that advice in writing).

What's a worker?

Every state is slightly different, but a worker is a natural person (not a Pty Ltd company) who is paid in return for regular personal exertion for someone. There are exceptions and complication of course, but as a broad rule, that's about right.

If a worker is injured on the job, that worker has statutory rights to claim for medical expenses, rehabilitation, and resulting loss of income. You can't take that away from someone (no matter whether you think you should be able) - if a (within the act) worker is injured, it's the worker's choice as to whether to lodge a workers compensation claim or not.

So what's an employer?

An employer is someone who engages workers. Owner builders don't have ABNs, they aren't "businesses" as such, but if an owner builder engages workers on the owner builder's construction site, it's highly likely the owner builder would be deemed to be the employer for the purposes of the workers' compensation act.

If you don't agree, please double-check with WorkCover (iCare in NSW) in your state. But get that advice in writing - people regularly tell us that they get different answers on different days of the week.

Am I a worker?

No. You (the owner builder) are the employer, you're not the worker. The sole trader contractors you've engaged may be considered to be your workers, not you yourself.

Is my tradesman a worker?

If the tradesman is a sole trader - then yes, maybe. The same rule applies as in the last paragraph - the sole trader is not a worker with respect to his own business - just like you. With respect to his own occupation, he's the employer, not the worker.

But when it comes to respecting to your occupation, he might be your worker.

Wow that's non-intuitive

I'm sorry; I wish it were easier. But it does make sense when you consider what workers' compensation insurance is trying to achieve - that all workers be protected against injury on the job. The acts are written specifically about "natural persons" and "deemed workers" for a reason - to stop unscrupulous businesses from leaving their workers unprotected.

So does public liability cover workers compensation

NO. IT. DOES. NOT.

It's frustrating that some of our competitors claim that public liability covers workers' compensation risks. It doesn't. It can't. It's bordering on malicious to claim that it does. If public liability could cover workers' compensation insurance, it'd be called "workers compensation insurance", not "public liability insurance".

What public liability insurance does do, is pick up legal liability that is not workers compensation - e.g. a lawsuit for personal injury by a non-deemed worker.

I like what the other blokes said

But it's not right. Read the other blokes' policy wording - there will be a firm exclusion to say "this does not cover workers compensation liabilities". All public liability insurances say that (even the one that comes with your car insurance!) - what do you suppose it means when someone tells you that when the policy wording says the opposite?

Get the facts

Please talk to WorkCover in your state (they're called iCare NSW in NSW). Explain to them that you're a builder engaging sole trader contractors (though of course you won't know exactly how many at such an early stage) to work on your project site. If they tell you that you don't need workers compensation - then that's great. Just get that in writing (so the regulator can't later deny that advice), and feel confident that you've protected yourself.

Just please protect yourself - make sure you're not going to get into trouble by not having the appropriate insurance.

For more information about Protect Yourself, visit our website.

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