Why should a contractor that the strata hires carry Liability Insurance?
When hiring a contract to perform any kind of work on your property, whether the contract is an individual or a company, the quality or cost of their workmanship aren’t the only things to consider.
We recommend that you always confirm that a contractor or tradesman that you are dealing with has their own Commercial General Liability policy. This can be confirmed by requesting a Certificate of Insurance.
Why should you insist on evidence of liability insurance? The strata’s insurance policy contains an exclusion that states that the policy does not insure against property while the property is actually being worked on, or caused by any repairing, adjusting or servicing of the property, unless fire or explosion ensures and then only for the loss or damage caused by the fire or explosion.
Another exclusion to consider is that there is no coverage for the cost of repairing faulty or improper material, workmanship or design. Resultant damage would be covered unless the policy otherwise excludes that particular type of damage. The insurance policy is not intended to act as a warranty for the work and materials provided by others.
Injuries that may be caused by a tradesman’s activities; someone could be injured as a result of work that is being performed on your property. If the tradesman does not have appropriate liability insurance, it is unlikely that the injured party would receive much, if any, compensation. Finally, any employees of the strata or any workmen hired by the strata are required to have valid Workers’ Compensation coverage.
The strata’s policy will not provide coverage as a substitute for the appropriate Workers’ Compensation coverage that the hired contractor and the contractor’s employees must carry.
The strata’s liability policy would respond to a loss for injury to hired contractors and the contractor’s employees only if the injury occurs out of the named insured’s negligence. Should the contractor sue the strata, the policy will cover the defense costs incurred with respect to the named insured.