Contractor Work, Fidelity Cover and Additional Owner Premiums

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Posted: January 26, 2026

Contractor Work, Fidelity Cover & Additional Owner Premiums

Community schemes often rely on contractors for maintenance, upgrades, and repairs. While essential, contractor work brings legal, safety, and insurance considerations. At the same time, schemes must protect themselves against internal risks such as theft of funds and clarify when additional owner premiums apply.

Health and Safety Responsibilities for Contractor Work

Under the Occupational Health and Safety Act (OHS Act), the scheme (via its Trustees or Directors) is considered the employer for work performed on common property. This means:

  • Ensuring contractors comply with all OHS regulations
  • Obtaining proof of their insurance cover (public liability and workers’ compensation)
  • Monitoring compliance throughout the project

Failure to do so can lead to:

  • Criminal liability for Trustees or Directors
  • Financial liability for accidents or injuries
  • Possible repudiation of insurance claims

Contractor Insurance Requirements

Before appointing a contractor, Trustees or Directors should request:

  • Public liability cover (to protect against third-party injury or damage)
  • All-risk construction cover (for larger projects)
  • Proof of workers’ compensation registration
  • Relevant trade or compliance certificates

Fidelity Cover

Fidelity cover protects the scheme against theft or fraud of its funds by:

  • Trustees or Directors
  • Managing agents and their employees
  • Employees of the scheme

In terms of STSMA Prescribed Management Rule 23(6), all sectional title schemes must have fidelity insurance sufficient to cover the maximum funds the scheme holds at any time.

Without this cover, owners bear the loss if scheme funds are stolen.

Additional Owner Premiums

Some owners install improvements that increase the scheme’s insurance premium, for example:

  • Adding a thatch roof structure
  • Installing large glass panels
  • Fitting high-value fixtures that raise replacement costs

In these cases:

  • The insurer may charge a higher premium
  • The scheme can recover this cost directly from the owner via the levy statement
  • Clear communication is essential to avoid disputes

Proper oversight of contractor work, adequate fidelity cover, and fair allocation of additional premiums are all part of sound financial and risk management in community schemes. These measures protect both the scheme and its members from avoidable losses.

ANGOR Property Specialists works with schemes to ensure compliance, maintain full insurance protection, and manage owner-specific insurance adjustments fairly.

 

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