Insurance requirements for licensed plumbers

In June 2002, the Victorian Government introduced minimum insurance requirements for plumbers in two separate Ministerial Orders:

• Licensed Plumbers General Insurance Order – for all classes of work, except Type B Gasfitting
• Licensed Plumbers (Type B Gasfitting work) Insurance Order.

Plumbers who are licensed (or seeking to be licensed) in Type B Gasfitting and any other class of plumbing work must hold insurance that complies with both Ministerial Orders.

This can be achieved via a single insurance policy that covers both types of work, or via separate policies.

Licensed plumbers are also free to hold insurance cover (e.g. types of cover or insured limits) that is greater or more broad than that required by the Ministerial Orders.

Evidence of insurance

A Certificate of Currency must display the plumber’s full name, the name of their insurer, their policy number and the period of time they are covered for under that policy.

The VBA also requires the Certificate of Currency to include a notation with specific wording.

For all classes of work, except Type B Gasfitting:

• “This insurance complies with all of the requirements of the Ministerial Order, Licensed Plumbers General Insurance Order, dated 20th June 2002”.

For Type B Gasfitting:

• “This insurance complies with all of the requirements of the Ministerial Order, Licensed Plumbers (Type B Gasfitting work) Insurance Order, dated 20th June 2002”.

The VBA is concerned that some policies issued by the insurance market to licensed plumbers do not meet the minimum insurance requirements set out in the Ministerial Orders. Some policies might also contain exclusions or limitations that are not allowed by the Ministerial Orders.

That’s why it is so important that licensed plumbers check their Certificate of Currency and any insurance schedule they are given and ask themselves these questions:

• Does my Certificate of Currency include the notation with the required wording?
• Is the notation for general plumbing or Type B Gasfitting?
• Does the notation’s wording match the VBA’s required wording written above?

If a plumber can confidently answer each of these questions, then they are ready to send their Certificate of Currency to the VBA.

If they couldn’t answer the questions with certainty, the VBA recommends plumbers contact their insurance broker and ask them to issue a compliant insurance policy and a Certificate of Currency that not only reflects the minimum requirements of the Ministerial Orders, but also displays the relevant notation.

By holding the mandatory minimum level of insurance cover, licensed plumbers are not only protecting their clients, they are also protecting themselves.

Other requirements

There are several other insurance requirements licensed plumbers must have to ensure their insurance will adequately cover them and their clients in the event of a claim. While the insurer should take care of the details when issuing a compliant policy, there are some important requirements all plumbers should be aware of.

Domestic plumbing work

Jobs relating to a home, or a building or structure built on land which has or will have a home, are classed as domestic plumbing work. This work includes complex plumbing work performed in apartment buildings.

For all classes of plumbing work, except Type B Gasfitting:

• The insurance must cover the cost of rectifying defective or incomplete plumbing work, as well as any trade practices and public or completed work liabilities, for six years after the completion of any plumbing work.
• For public liability and completed work liability – cover of at least $5 million is required.
• For all other liability – cover of at least $50,000 for any one claim or series of claims related to a compliance certificate.
• Licensed plumbers will also need sufficient cover to pay for expenses incurred by a building owner as a result of defective or incomplete plumbing work. These may include necessary alternative accommodation, removal and storage costs, the building owner’s legal costs and repayment of any deposit or progress payments.

For Type B Gasfitting:

• Licensed plumbers must be covered for any public liability relating to their Type B Gasfitting work that arises during their period of insurance.
• The minimum amount of cover for public liability is $5 million.

For all classes of plumbing work (including Type B Gasfitting):

• The insurance must cover anyone doing plumbing work for the plumber concerned (such as apprentices or registered plumbers who are either employed by the licensed plumber or sub-contracted to them).

Non-domestic plumbing work

Plumbing work that is not on a home or in relation to a home is non-domestic plumbing work. This work commonly takes place in shops, factories and office towers, and often involves complex plumbing work.

Insurance requirements for non-domestic plumbing work are the same as those for domestic plumbing work, except that licensed plumbers must have cover of at least $100,000 for all forms of liability (except public and completed work liabilities) associated with any one claim or series of claims related to a compliance certificate.

Policy exclusions

Insurance for licensed plumbers must not contain conditions, limitations or exclusions imposed by the insurer that are not permitted in the relevant Ministerial Order.

The VBA has been informed that some insurers are seeking to exclude coverage of plumbing work performed at heights of three storeys or more from their policies.

We have raised this issue with three major insurance brokers but did not identify any specific policy exclusions relating to heights in the policies provided to us.

We are also aware that some policies may seek to exclude the use of performance solutions (for plumbing design work) on domestic buildings.

If a licensed plumber carries out plumbing work at heights of three storeys or more, or does plumbing work under a performance solution, the VBA strongly recommends they contact their insurance broker to confirm that their policy covers all aspects of their work.

While some insurers may seek to exclude certain work or activities from their policies, many insurers still offer insurance coverage that meets the requirements of the Ministerial Orders.

Protecting you and the public

At the VBA, we know licensed plumbers would rather be out on a job than reading their insurance policy. But before we can grant or renew a plumbing licence, we need licensed plumbers to hold adequate insurance.

For more information on plumbing insurance requirements, please refer to the relevant Ministerial Order or contact an insurance broker.