Some Trades Need $5m Public Liability by Law. Qld Government and Some Councils Want $20m

Is public liability compulsory for tradies?

Outside a short list of licences, public liability is a contract term or a choice. Business.gov.au describes it as insurance that some states and territories need for certain occupations. In Queensland, the QBCC tells home owners to check that their contractor has met the insurance obligations in the contract, and says most contracts require the contractor to have public liability and contract works insurance. For a Queensland builder, the requirement sits in the contract.

A handful of licences do set a dollar figure. In Queensland, an electrical contractor licence requires public and products liability with a limit of indemnity of at least $5,000,000, plus consumer protection insurance of at least $50,000, according to WorkSafe Queensland. In Victoria, a 2002 Ministerial Order requires licensed plumbers to hold public liability and completed work liability of at least $5,000,000 for any one occurrence, plus at least $50,000 for other liability on domestic work or $100,000 on non-domestic work. In Tasmania, CBOS lists a minimum of $5 million in public and products liability for electrical contractors, plumbing contractors, plumber practitioners and gas-fitting contractors, and $5 million in contract works and public liability for demolishers and fire-protection builders.

In Western Australia, the Electricity (Licensing) Regulations 1991 require electrical contractors to hold civil liability insurance that complies with the requirements specified by the Board, and the licence is suspended for any period without it. The regulation itself names no dollar amount. For general trades in NSW, South Australia, the ACT and the Northern Territory, we found no statutory public liability requirement.

$5 million is the law, $20 million is the client's condition

A premium is what a tradie pays the insurer each year. A cover limit, which the Queensland rule calls a limit of indemnity, is the most the insurer will pay on one claim or occurrence. The $5 million in the Queensland, Victorian and Tasmanian rules is a limit, and it is about 1,500 times a typical year of builder public liability premium ($3,300) at Going Rate's prices. The comparison sets a limit against a yearly price, so it says nothing about any payout, and Going Rate's figure is a general builder public liability premium, not the price of a $5 million policy in particular.

The $20 million figures come from specific clients. Business Queensland's checklist for Queensland Government prequalification requires a minimum of $20 million in public liability insurance, alongside minimum net tangible assets of $156,000 and a minimum current ratio of 1:1. Bathurst Regional Council in NSW requires all contractors and subcontractors to hold public liability with a minimum coverage of $20 million, under a policy reviewed in November 2024. For permits to conduct an activity in municipal public space, such as works in the road, the City of Melbourne requires public liability cover of at least $20 million for a single claim.

Those three requirements are four times the $5 million minimum that Queensland, Victoria and Tasmania set for their licensed electrical, plumbing and gas trades. We found no source that sets out how premiums rise with the limit, so ask each insurer to quote at the limit the contract names. These are the only $20 million requirements we verified, and we found no published $10 million head-contractor requirement, so read the insurance clause before quoting council, government or commercial work.

What happens to the home owner if a tradie has no public liability

The NSW Government warns home owners that if the builder or tradesperson does not have public liability insurance, they could be liable because they own the property.

The quickest check is a certificate of currency from the tradie's insurer. Tasmania already asks for one, and electrical contractors there must provide a certificate of currency with their licence application, according to CBOS. Home owners in any state can ask for the same document before work starts.

Some tradies also carry broader cover. A year of general business insurance ($6,300) is a separate product, and a home owner should not assume it includes public liability unless the certificate lists it.

Workers compensation is the cover the law does require

Business.gov.au says employers must get workers compensation insurance from an authorised insurer, and that if you are a sole trader, workers compensation insurance doesn't cover you. In Victoria, WorkSafe says an employer who pays, or expects to pay, more than $7,500 a year in rateable remuneration, or who engages apprentices or trainees, must register for WorkCover insurance.

Each state sets its own penalties. In NSW the current maximum for failing to insure is 500 penalty units, six months' jail or both, and a penalty unit is worth $110, according to Business NSW. The same March 2026 article says the Workers' Compensation Legislation Amendment Act 2025 will raise penalties for large employers on a date yet to be confirmed. Safe Work Australia says an uninsured NSW employer must also repay the amount spent on a claim, plus penalties. WorkCover Queensland charges a penalty of 100% of the unpaid premium plus 50% of any claim payment it makes, and recovered $14,391,850 in 1,124 actions in 2025-26 to 30 September 2025. In the ACT, Safe Work Australia says the regulator may recover up to double the avoided premium for up to five years.

Safe Work Australia counted 17,600 serious construction claims in 2023-24 (preliminary figures), 12.0% of all serious claims, with a median 8.4 weeks off work and median compensation of $20,000. Its 2025 statistics recorded 37 construction worker deaths in 2024, 20% of the 188 workers killed by traumatic injuries that year.

The ACT case where the employer was uninsured

In August 2026 the Canberra Times reported an ACT Supreme Court judgment for a worker who fell through an uncovered skylight at a construction site at the Australian Defence Force Academy. He sued his former employer, a scaffolding firm. Because the employer was uninsured and later went into liquidation, the ACT Workers' Compensation Default Insurance Fund stepped in to defend the claim, and the judge ordered the fund to compensate him.

The award came to $752,487. It included $165,000 in general damages, $127,500 in past lost earnings and $342,619 in future economic loss, plus superannuation, medical expenses and post-surgery care. The judge found the worker 20 per cent contributorily negligent. The total is nearly 38 times Safe Work Australia's national median compensation of $20,000 for a serious construction claim.

The claim was a worker suing his own employer, and the workers compensation default fund answered it. A public liability policy covers injury or damage to third parties, such as a client or a passer-by. The ACT scheme can also recover up to double the avoided premium from an employer that fails to insure, though the report did not say whether that happened here.

Home warranty insurance becomes compulsory above a job value

Home warranty schemes protect the home owner on residential building work, and each state sets its own trigger. In NSW, icare says Home Building Compensation Fund cover is required by law for residential building work valued at over $20,000. In Western Australia, home indemnity insurance applies to residential work over $20,000. South Australia raised its building indemnity insurance threshold from $12,000 to $20,000 on 10 November 2025, for domestic work that needs development approval. The Northern Territory raised the value that triggers a fidelity certificate from $12,000 to $25,000 for certificates issued after 30 March 2026.

Victoria changed its scheme in 2026. For contracts signed on or after 1 July 2026, Home Warranty replaces Domestic Building Insurance, applies to eligible projects over $20,000 and may provide up to $400,000 in total assistance per home, the Building and Plumbing Commission says. Existing DBI policies continue under the old scheme, which applies to work over $16,000. On its DBI page, the commission says a builder who knowingly or recklessly demands or receives money under a major domestic building contract without DBI faces up to 500 penalty units (approximately $96,000) for a person or 2,500 (approximately $480,000) for a company, and the strict liability offence carries up to 240 units (approximately $46,000) and 1,200 units (approximately $230,000).

In Queensland, the QBCC says most residential work valued at more than $3,300, including materials, labour and GST, must have cover under the Queensland Home Warranty Scheme, and the contractor must collect and pay the premium within 10 business days of entering into the contract. In the ACT the minimum cover rose from $85,000 to $200,000 on 1 January 2025, and the time to lodge a claim from 90 to 180 days. Courts have fined builders under these rules. WA Building and Energy reported a builder fined $7,000 for a home indemnity insurance offence and $5,000 for unjustified progress payments at sentencing in January 2026, and the Daily Liberal reported a Dubbo tradie fined over $62,000 for building work without a licence or insurance on $178,000 of work.

Pricing the rest of a tradie's insurance

A typical trade insurance package ($4,300) usually includes public liability, so price it as an alternative to a standalone policy, never on top of one. Neither includes home warranty, which is arranged per job through the state scheme. The Queensland and Tasmanian rules name public and products liability together, so a policy that meets them already carries products cover. Business.gov.au says a business may need product liability insurance if it makes, sells or supplies goods, even in the form of a repair or service, and a year of standalone product liability cover ($7,750) is priced as its own line.

Sole traders fall outside workers compensation, and business.gov.au says they need their own personal death, illness and disability insurance. A year of income protection ($3,400) is one way to replace earnings after an injury. General business insurance ($6,300) is broader cover again, and at Going Rate's prices it costs nearly twice a year of builder public liability premium.

The Vero SME Insurance Index 2025, reported by Insurance Business Australia, found almost 10% of businesses said they were underinsured and only 42% reviewed their sum insured each year. Master Builders Australia says more than 98.6% of construction businesses employ fewer than 20 people, and the ABS counted 76,414 new construction businesses in 2024-25, more than any other industry.

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