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Insurance is rarely a compelling topic of conversation, least of all for facilities managers who would rather be out solving problems than trawling through tedious paperwork.
However, as much as we’d like to ensure all facilities are safe enough to render insurance redundant, it is a critical part of facilities management.
Some insurances are mandated by law, others are recommended as best practice, and others toe the line between the two. With all this in mind, sorting out what insurances you need for what jobs and for who, can be complicated.
This blog is by no means a comprehensive guide as to what insurances you'll need for your contractors. However, it will give you a starting point, and offers a simple solution to some of the administrative headaches surrounding insurances.
We recommend speaking to a licenced insurance broker, and employment relations professionals for advice on insurance and appropriate coverage.
Usually, the people within your facilities teams have relevant insurances managed by their employer. When it comes to engaging contractors however, insurance can become a little more complicated, particularly in the case of sole traders.
If your team has been tasked with engaging contractors, and given the responsibility of checking they’re appropriately insured, these are three main types of insurance to check for.
In Australia, workers compensation insurance is compulsory if you have employees. This insurance protects your organisation from potentially huge financial loss if a contractor is hurt while working on your facility.
Payments from this coverage serve to pay the workers wage while they are unfit to work, and to cover any relevant medical expenses.
When it comes to working with contractors you’ll need to be certain that whoever employs them has appropriate workers compensation insurance. If they’re a sole trader, that means they’ll have to have their own insurance.
It is critical that everyone working in your facility is appropriately covered by workers compensation insurance. Failing to do so exposes your organisation to an inordinate amount of risk.
Public liability insurance is a little like CTP insurance on your car. It provides protection for your organisation in instances where you might be liable for negligence.
Primarily, public liability covers you for if third party death or injury occurs in your facility.
While not mandated for all businesses, realistically the risks of not purchasing public liability greatly outweigh the cost. In fact, for certain businesses public liability insurance is required to operate, so always check with your state authority.
Professional indemnity insurance is mandated in regulatory frameworks for some businesses. Most notably, it provides coverage for when the results of a contract are not achieved.
The idea of professional indemnity insurance is to protect against damage caused by bad professional advice. For certain professions, such as engineering, it can be mandated by regulators.
As with workers compensation insurance, it is generally the responsibility of the contractor to ensure they have an appropriate level of cover. However, when engaging the contractor, it is critical to ensure this insurance cover is in place, in case they fail to fulfil their obligations.
It sounds like common sense to not engage contractors lacking proper insurance. However, a risk often overlooked is that of insufficient documentation. Before you assign work to a contractor, you need to ensure they are appropriately insured.
And the work doesn’t stop there. Not only do they have to have the insurance, but you must ensure you have a record of it, that is accessible when needed. For example, if you have a contractor in for high-risk work, their Workcover insurance details should be recorded alongside the work order, their induction confirmation, and permit to work.
When it comes to keeping records of your contractor’s insurance details, there’s a simple solution to a complicated problem.
Modern software solutions, like FMI Works, help you to keep a comprehensive record of contractor insurances. These records are easily accessible should you ever need them, logically linked to other relevant documentation.
While we all hope we never need to make an insurance claim, making sure the breadcrumb trail is there if needed can help to give facilities teams peace of mind.
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