What the insurance clause and the indemnity clause each do

The insurance clause tells you what policies to hold, for how much, for how long, and what proof to hand over. The indemnity clause does something different: it is a promise to cover another party's loss in defined circumstances. One buys cover; the other accepts liability — and you can accept liability your cover does not reach. A certificate of currency answers only the first question.

Eight things to check before you sign

Work through these against the document you were actually handed, not a blank standard form. Not certain which AS form you've been handed? Start there.

  1. The named insured matches your contracting entity. The certificate of currency must name the exact entity signing the subcontract — not a related trading name, not the trust behind it. A mismatch gets the certificate knocked back later, and the cover may not sit where you assume.
  2. The limits, and whether they are per occurrence or in the aggregate. An aggregate limit is a pool drawn down across the policy year; the same figure per occurrence resets for each event. Check which basis the subcontract requires — you can be compliant on the number and non-compliant on the basis.
  3. The period of cover against your program. Cover may need to run past practical completion and through the defects liability period. A certificate that expires mid-job is a renewal to diarise, not one-off paperwork.
  4. Who arranges the contract works policy, and who wears the excess. Contract works cover may be arranged by the principal, the main contractor, or you. Find out which, whether you are a named insured, what it excludes, and who pays the excess — for a subbie the excess is often the number that hurts.
  5. Whether the subcontract puts design on you. Professional indemnity cover only matters if you are designing something: shop drawings, a proprietary system, a performance specification. If design has come down to you and you hold no PI cover, that gap is better found before you sign than after a defect appears. Worth reading what AS 4902 means for subbies too.
  6. How far the indemnity reaches. Read the trigger words. An indemnity limited to loss caused by your negligent act or omission is narrower than one covering loss arising out of or in connection with the works. The wider form can reach loss you did not cause, so check whether it is confined to your acts and omissions, and whether another party's contribution reduces what you owe.
  7. Whether the indemnity is capped, and whether it survives. Look for a monetary cap, a carve-out for consequential loss, and any words continuing the indemnity after the subcontract ends. An uncapped indemnity with no end date is a liability you cannot price — worth raising before signature, on the same reasoning as checking retention terms.
  8. What proof you must give, and when. Check whether handing over certificates is a precondition to site access or a progress payment. If it is, find the deadline and the format — an administrative miss can hold up money that has nothing to do with insurance.

Workers compensation: a statutory obligation, not a contract term

Your subcontract will require workers compensation cover, but the obligation itself doesn't come from the subcontract. It comes from the workers compensation legislation of the state your workers' employment is connected with, and no contract clause lowers it.

Queensland is a worked example. Section 48(1) of the Workers' Compensation and Rehabilitation Act 2003 (Qld) requires every employer, for each worker employed, to insure and remain insured against injury sustained by the worker — both for the employer's legal liability for compensation and for its legal liability for damages — and section 48(3) requires that cover to sit under a WorkCover policy or a self-insurer licence. Section 50(a) treats an employer as contravening section 48 if it has not applied for the policy within 5 business days of first employing a worker, and section 51 makes that an offence carrying up to 500 penalty units. (Source: Queensland Legislation's authorised reprint, current as at 1 January 2025.)

The state that counts is where the worker usually works, not where today's site is. Section 113(3) connects a worker's employment to the state where the worker usually works; failing that, where they are usually based; failing that, where the employer's principal place of business in Australia is. Section 113(7) disregards a temporary arrangement of not longer than six months — so sending a crew interstate for a three-month job does not, on that wording, move them onto the other state's scheme.

Those sections are Queensland's, not a national rule — the Act itself assumes other states have their own, since section 51(2)(b) refers to cover held under the law of the state a worker's employment is connected with. Check the scheme that applies to your workers.

The one question to put to your broker

Send the insurance and indemnity clauses to your broker before you sign and ask, in writing: does our current cover respond to the liability these clauses make us take on? That is a question for your insurer, not the main contractor's contracts team. If the answer is no, you have found the gap while you can still price it.

What to keep, whichever way the clauses fall

The evidence that settles an insurance or indemnity argument is the same evidence that settles a delay or variation argument: what happened, when, who was on site, what it cost. Capture it as it happens — a contemporaneous record is easier to stand behind than one reconstructed months later. DelaySolve's free tools for subbies are built for that.

None of this tells you whether a particular clause bites the way you fear — that depends on your contract and your circumstances, and it is what your own adviser is for. What it gives you is the list to work through before the signature goes on.