Does Public Liability Cover Hitting Underground Services?
Usually, but only if three things line up. You must be legally liable for the damage, your policy must include underground services damage without an exclusion, and you must have taken the steps insurers expect before digging, starting with a Before You Dig Australia (BYDA) enquiry. Many contractor policies limit this cover through exclusions, sub-limits or a higher excess, so check your policy before you dig, not after a strike.
This guide explains who pays when you hit a service, when public liability responds, what insurers expect, and what to check with your broker.
Who pays when you hit an underground service?
Generally, the business doing the digging. If your work damages a gas main, water pipe, power cable or telecommunications line, the asset owner will repair it and bill whoever caused the damage. That bill can include emergency response and repair costs, and in some cases further claims from people affected by the outage.
Liability isn’t always yours alone. It can be disputed or shared if the asset owner’s plans were wrong, the service wasn’t where records showed, or the principal failed to pass on site information it held. But if you didn’t obtain service plans or locate services before digging, you’ll have little to argue with.
Where you’re liable, your public liability insurance is the policy that responds to damage to the asset owner’s property, subject to the policy’s terms. If the asset owner or an affected property owner claims on their own insurance first, their insurer can then recover the cost from you or your insurer.
Does public liability insurance cover underground services damage?
It can, but this is one of the most heavily conditioned parts of a contractor’s liability policy. Before relying on it, check:
- Whether it’s covered at all: some policies exclude underground services damage entirely, particularly general trade policies not written for excavation work.
- Sub-limits: some policies cap underground services claims well below the main liability limit.
- The excess: many policies apply a separate, higher excess to underground services claims.
- Conditions: cover usually depends on you having obtained BYDA plans and located services before excavating.
- Specific assets: some policies exclude particular services, such as high-pressure gas mains or fibre-optic cables.
- Depth limits: many policies only cover excavation to a set maximum depth, and that depth varies between insurers, so check yours matches your deepest work.
- Vibration and support: damage from vibration or removal of support is often excluded or capped separately.
You may see this described online as an “XCU exclusion” (explosion, collapse and underground damage). That’s a term from overseas policies. In Australian policies, it usually appears as an underground services exclusion, condition or sub-limit, so look for those words in your policy wording.
If you excavate, trench, bore or drive piles, your policy should be written for that work. Our civil construction insurance and earthmoving and excavation insurance pages explain the cover those businesses typically need.
What is an underground services excess?
An underground services excess is a separate excess that applies only to claims for damage to underground services. Because service strikes are common and expensive, insurers often set it much higher than the policy’s standard excess. A small strike can cost less than the excess, so you pay it yourself.
The excess only applies if the claim is accepted. If you didn’t meet the policy’s underground services conditions, such as obtaining BYDA plans, the insurer can refuse the claim altogether rather than just applying the higher excess. Check both the excess amount and the conditions attached to it before you start work.
What is the underground services condition?
The underground services condition is the clause in a contractor’s liability policy that sets out what you must do before digging for underground services cover to apply. Wording varies between insurers, but it commonly requires you to:
- obtain current service plans, usually through BYDA, before work starts
- locate and verify services on site rather than relying on the plans alone
- follow the asset owners’ instructions and clearance requirements
- keep records showing you did all of the above
If you breach the condition, the insurer can refuse an underground services claim, leaving you to pay the repairs and any third-party claims yourself. Read the exact wording in your policy, because some conditions are stricter than the general steps above.
What do insurers expect before you dig?
Insurers look for the same steps the law already requires. Under the WHS regulations, a business carrying out excavation work must obtain current information about underground essential services in and around the work area before digging, and share it with others involved in the work.
In practice, insurers expect you to:
- Lodge a BYDA enquiry: BYDA is a free national referral service that sends you plans from registered asset owners. Allow time for asset owners to respond before you start.
- Locate the services: use the plans as a guide, not proof. Locate services on site, for example with a locator or by potholing using hand digging or vacuum excavation.
- Check for private services: BYDA only covers assets registered by their owners. Private services on a property, such as lines between a meter and a building or services across a commercial or industrial site, often won’t appear, so ask the property owner for site plans or use a private locator.
- Follow asset owners’ instructions: plans often come with conditions about digging near the asset.
- Keep records: save the BYDA plans, locating results and photos. If there’s a claim, they’re your evidence that you took reasonable steps.
- Disclose high-risk work: tell your insurer if you regularly work near major services, such as gas mains, high-voltage cables or fibre-optic trunk lines, so your cover reflects it.
Skipping these steps is the most common reason an underground services claim is disputed.
What isn’t covered after a service strike?
Public liability covers your liability for damage to other people’s property. It doesn’t cover:
- Damage to your own excavator or plant: that needs plant and equipment insurance.
- Damage to the works you’re building: that falls under contract works insurance.
- Fines and penalties: WHS or regulatory penalties aren’t covered by public liability.
- Breaches of policy conditions: a claim can be reduced or refused if you didn’t follow the conditions, such as obtaining plans.
- Liability you accepted under contract: if your contract makes you responsible beyond your normal legal liability, the policy may not follow it unless it’s extended to cover contractual liability.
- Your subcontractors’ strikes: subcontractors are usually expected to hold their own public liability.
Does contract works insurance cover service strikes?
The material damage section of a contract works policy covers loss or damage to the project itself and materials on site. It doesn’t cover the asset owner’s damaged service. Some construction policies combine contract works with a public liability section, in which case the liability section is what responds to the strike, subject to the same underground services terms.
Does public liability cover vibration or removal of support?
Often not without an extension. Many liability policies exclude damage to neighbouring property caused by vibration, or by removing or weakening its support, which is the risk when excavation, piling or demolition causes a neighbour’s wall to crack or ground to subside. Cover is usually added back through a vibration, weakening and removal of support extension, either up to the full liability limit or to a sub-limit.
Insurers offering the extension may ask about the scope and depth of the work, the contractor’s experience, and whether dilapidation reports were done on neighbouring buildings before work starts. A dilapidation report also gives you evidence of existing cracks if a neighbour later claims your work caused them.
Which trades need underground services cover?
Any business that breaks ground should check how its policy treats underground services, including:
- Excavation and earthmoving contractors: digging footings, trenches and site cuts.
- Trenching and boring contractors: including horizontal directional drilling.
- Demolition contractors: removing slabs and footings where old services may still be live.
- Plumbers and drainers: excavating for water, sewer and stormwater connections.
- Electricians: trenching for consumer mains, sub-mains and outdoor lighting.
- Telecommunications contractors: laying cable and conduit.
- Landscapers and retaining wall builders: digging garden beds, irrigation and footings.
- Fencing contractors: augering and driving posts, often close to boundary services.
- Tree contractors: stump grinding near services.
Two groups need a different cover. Service locators and geotechnical drillers can be held responsible if a contractor relies on their advice or markings and hits a service, which is a professional indemnity risk, not just public liability.
What should you do after a service strike to protect your claim?
Once the site is safe and the asset owner has been notified using the emergency contacts on your BYDA plans:
- Record everything: photos and video of the damage, the excavation and any surface markings, with measurements where possible.
- Keep your pre-dig evidence: the BYDA plans, locating records and safe work method statement.
- Don’t admit liability or agree to pay: let your insurer deal with the asset owner’s claim, as admitting fault can affect your cover.
- Tell your broker or insurer promptly: late notification can complicate a claim.
- Leave the excavation open if it’s safe: the asset owner or assessor may need to inspect the damage.
What to ask your broker before you dig
- Does my public liability insurance cover underground services damage?
- Is there a sub-limit or a separate excess for it?
- What conditions apply, such as BYDA plans or potholing?
- Are vibration and removal of support covered?
- Does my cover meet the underground services requirements in my contracts?
Coverscope arranges liability cover for civil, excavation and construction businesses, and checks these terms against the work you do and the contracts you sign.
This article provides general information only and doesn’t constitute legal or personal financial advice. Policy terms for underground services vary between insurers, so check your own policy wording.
