Government Tender Insurance Requirements Australia

Government Tender Insurance Requirements: What You Actually Need

Insurance is one of the most frequently asked-about topics for businesses entering government procurement. The requirements can seem daunting, especially when tender documents reference $20 million in public liability or list four different types of insurance. The good news is that it is more straightforward than it appears, and you do not need insurance just to bid.

This guide explains exactly what insurance government tenders require, when you actually need it, and how to avoid overpaying or under-insuring.

The Key Principle: You Need Insurance to Sign, Not to Bid

This is the most important point and the one most often misunderstood. You do not need to hold insurance to submit a tender response. You need to hold the required insurance before you execute the contract.

Tender documents typically state something like “the successful supplier must hold the following insurances prior to contract execution.” This means you can bid first and arrange insurance after you win. This is important for small businesses that might not want to pay insurance premiums until they have secured work.

That said, if the tender asks you to confirm that you hold specific insurance, you should be truthful. Many tenders ask “do you currently hold or are you willing to obtain” the required insurance. Answering yes to the willingness question is perfectly acceptable.

Types of Insurance Required

Public Liability Insurance

What it covers: Injury to third parties or damage to third-party property arising from your business activities.

Typical government requirement: $10 million to $20 million. The amount depends on the contract type, value, and risk level.

$10 million is common for low-risk services (consulting, IT, administrative services)
$20 million is standard for higher-risk work (construction, cleaning, maintenance, events)
Some Defence contracts require $50 million or more

Approximate cost: $500 to $5,000 per year for small businesses, depending on industry, revenue, and coverage level.

When it is required: Almost always. Public liability is the baseline insurance requirement for virtually all government contracts.

Professional Indemnity Insurance

What it covers: Claims arising from professional advice, errors, or omissions in the services you provide.

Typical government requirement: $1 million to $10 million, depending on the nature and value of the services.

$2 million is common for general consulting and professional services
$5 million to $10 million for high-value advisory, engineering, or financial services
IT services contracts often specify $5 million

Approximate cost: $1,000 to $10,000 per year, varying significantly by profession and coverage level.

When it is required: For any contract involving professional advice, design, consulting, IT services, or technical expertise. Not typically required for goods supply or manual services like cleaning.

Workers Compensation Insurance

What it covers: Injury or illness suffered by your employees in the course of their work.

Typical government requirement: As required by law in the relevant state or territory.

Legal position: Workers compensation is mandatory in every Australian state and territory if you employ anyone. This includes casual employees and, in some jurisdictions, certain contractors.

NSW: icare (State Insurance Regulatory Authority)
Victoria: WorkSafe Victoria
Queensland: WorkCover Queensland
WA: WorkCover WA
SA: ReturnToWorkSA
Tasmania: WorkCover Tasmania
ACT: Default insurance fund
NT: NT WorkSafe

When it is required: Whenever you have employees. Sole traders with no employees are typically exempt but should check their state’s requirements.

Product Liability Insurance

What it covers: Damage or injury caused by products you supply.

Typical government requirement: $10 million to $20 million, aligned with public liability coverage.

When it is required: When you are supplying physical goods. This includes IT hardware, furniture, equipment, chemicals, food products, and any manufactured items. Often bundled with public liability insurance.

Motor Vehicle Insurance

What it covers: Damage involving vehicles used in the course of contract delivery.

Typical government requirement: Third-party property damage at minimum, often comprehensive cover for vehicles used on government sites.

When it is required: When your contract involves driving on government property or using vehicles to deliver services.

How Requirements Vary by State

While the types of insurance are consistent across jurisdictions, the specific amounts and conditions vary:

Commonwealth — Tends to specify higher coverage amounts, particularly for Defence contracts
NSW — Often requires $20 million public liability for building and construction work
Victoria — Government-aligned contracts frequently require $20 million public liability
Queensland — Standard requirement is typically $10 million to $20 million
WA — Generally $10 million public liability for standard services
SA — $20 million is common for facilities and construction work

Always check the specific tender documents. The insurance schedule is usually in the draft contract attached to the tender.

How Requirements Vary by Contract Value and Risk

Smaller, lower-risk contracts generally require less coverage:

Under $50,000 — Often $5 million to $10 million public liability
$50,000 to $500,000 — Typically $10 million to $20 million public liability
Over $500,000 — $20 million public liability is standard, with additional cover types common
High-risk work — Construction, asbestos, electrical, working at heights — expect $20 million minimum plus specific insurances

Tips for Managing Insurance Costs

Bundle your policies — Many insurers offer package deals that combine public liability, product liability, and professional indemnity at a lower total premium
Shop around — Get quotes from at least three insurers or use an insurance broker
Use an insurance broker — Brokers understand government requirements and can find the right coverage at competitive prices. Their fee is usually built into the premium.
Increase your excess — A higher excess (deductible) reduces your annual premium
Review annually — Your insurance needs change as your business grows. Review coverage and premiums each year.
Ask the insurer about government requirements — Many insurers have standard government contractor packages

What to Include in Your Tender Response

When a tender asks about insurance, you typically need to provide:

Confirmation that you hold or will obtain the required insurance
Certificate of Currency for each policy (if you currently hold insurance)
Insurer name, policy number, coverage amount, and expiry date
Confirmation that you will maintain insurance for the contract duration

Keep your Certificates of Currency updated and readily accessible. Having them on hand speeds up your tender response process.

Common Insurance Pitfalls

Letting policies lapse — An expired policy during contract performance can be a breach of contract
Insufficient coverage — Make sure your coverage amount matches or exceeds the contract requirement
Wrong policy type — Public liability is not the same as professional indemnity. Read the requirement carefully.
Not disclosing claims history — If asked, be honest about past claims. Failing to disclose can void your policy.
Assuming you are covered — Read your policy. Some activities or locations may be excluded.

For more on preparing your business for government tenders, read our guide to finding government tenders.

Insurance is a cost of doing business with government, but it is a manageable one. Get the right cover, keep it current, and do not let insurance uncertainty stop you from bidding.