Contractor and consultant insurance for school property projects

Contractors working on school property projects must hold:

• public liability insurance
• professional indemnity insurance – if the works include contractor design obligations and the contract requires the contractor to hold professional indemnity insurance
• motor vehicle third party liability insurance, and
• plant insurance (if the contract requires the contractor to hold plant insurance).

Consultants working on school property projects must hold:

• public liability insurance, and
• professional indemnity insurance.

Professional indemnity insurance provides cover for financial loss as a result of negligence, errors or omissions by a contractor or consultant providing professional services.

What professional indemnity insurance covers

Subject to the terms of the policy, professional indemnity insurance typically covers:

• the contractor’s / consultant’s legal costs, and
• damages that the contractor / consultant is legally liable to pay.

Levels of insurance needed

The default levels of professional indemnity insurance in the school-led consultant agreements are:

• Short Form Agreement (SFA) – $500,000
• Form of Agreement for Engagement of Consultant (CCCS) – an amount equal to 5 times the fee with a maximum limit of $2,000,000 per occurrence.

Contractors with design responsibility must hold professional indemnity insurance that covers liability for the design services they’re providing.

For construction contracts, the level of cover required will be indicated in the contract.

• Medium Works Contract (School-led) – requires $1,000,000 of professional insurance where a contractor is providing design services.
• Major Works Contract (School-led) – includes guidance in Schedule 1 on the appropriate level of cover.

The above coverage levels are the default minimums. You might need higher insurance coverage if there are project-specific risks.

Copies of the school-led consultant agreements and construction contracts can be found in our procurement process section – see step 4 in particular.

Procurement process for school-led property projects

Public liability insurance provides cover for financial loss if a contractor or consultant is found liable for:

• loss or damage to another party’s property, and
• illness or injury to another party where the loss is not covered by the Accident Compensation Corporation (ACC).

Levels of insurance needed

The default levels of public liability insurance in the school-led consultant agreements are:

• Short Form Agreement (SFA) – $2,000,000
• Form of Agreement for Engagement of Consultant (CCCS) – $5,000,000.

The default levels of public liability insurance in the school-led construction contracts are:

• Minor Works Contract – $1,000,000
• Medium Works Contract – $2,000,000
• Major Works Contract – $5,000,000.

The above coverage levels are the default minimums. You might need higher insurance coverage if there are project-specific risks.