Can Subcontractors Depend on Your Public Liability Insurance?

Managing a company —particularly in sectors like construction, plumbing, or electrical work—often requires the employment of subcontractors. Subcontractors provide adaptability for specific work or to help with project deadlines. One issue companies should think about, though, is whether subcontractors are covered by public liability insurance. It’s a critical point since wrong understanding might result in expensive errors. The simple answer is that most of the time, subcontractors are not covered by your public liability policy; assuming they were might result in significant problems. Visit https://www.quoteradar.co.uk/public-liability-insurance/carers/ to get public liability insurance so that your company can withstand difficult circumstances. 

Knowing Public Liability Insurance:

Public liability insurance safeguards your company from claims made by third-party members of the public or clients if they sustain injury or property damage due to your job. This insurance would cover compensation and legal expenses when a passer-by trips over your equipment and gets hurt or if you mistakenly damage a client’s property while carrying out a job—. Although public liability insurance is not legally required in many sectors, it is highly advised because of its comprehensive coverage against unanticipated claims. Insurance of this kind usually covers:

• You, the policyholder and business owner
• Your direct workers
• Occasionally—based on your insurer—labour-only subcontractors

Typically, it does not cover bona fide subcontractors, who are viewed as independent entities

Labour-Only Vs Bona Fide Subcontractors:

Insurance coverage relies on the classification of the subcontractor. Hence, knowing the distinction between labour-only and bona fide subcontractors is critical.

• Labour-Only Subcontractors:

Labour-only subcontractors operate under your guidance. They use your tools, adhere to your directions, and receive hourly or daily payment. They act quite like staff members and are usually covered by your public liability policies.

• Bona Fide Subcontractors:

Bona fide subcontractors are independent, self-employed experts. They bring their tools, manage their approach, and quote for jobs instead of hourly pay. They should have public liability insurance because they are operating their own business. Insurers typically exclude subcontractors from your coverage since they are not under your direct control.

Why It Matters:

You might expect your insurance to cover injuries to a third party or damage to property caused by a subcontractor while working on your project. However, you might be left vulnerable if they are a genuine subcontractor without their insurance. 

• Out-of-pocket payment for legal expenses or damages
• Delays in your project
• Damage to the reputation of your business
• Issues with customers expecting you to shoulder all responsibility

In some situations, if the subcontractor is uninsured and unable to cover a claim, the harmed party might pursue you as the primary contractor. This is why you must make sure every company operating under your name is adequately covered.

What Actions Should You Take As A Business Owner?

As a responsible contractor, you should safeguard your clients and your company. The best strategy is to be proactive and clear about insurance obligations.

• Be Familiar With The Specifics Of Your Policy:

Contact your broker or insurer and verify who is covered under your public liability policy. Do not make any assumptions. Many insurers specifically mention that bona fide subcontractors must have their coverage.

• Request Subcontractors’ Proof Of Insurance:

Always request a copy of their public liability insurance certificate. Include it as a regular component of your new hires’ onboarding process before they start any work.

• Maintain Precise Records:

Keep neat logs of every subcontractor’s insurance papers and notes on their role (labour-only or bona fide). This guards you if any arguments later on arise.

• Write It Down:

Add provisions in your agreements mandating subcontractors to maintain their insurance and hold them responsible for any claims arising from their activities. This provides legal protection and clarifies matters.

• Review Your Arrangements Often:

Though a subcontractor may have provided evidence of coverage once, you should always verify it—particularly before new projects. Policies could end or be cancelled without warning.

Can You Add Subcontractors to Your Policy?

Some insurers might let you add subcontractors to your policy for an extra premium. Still, this usually comes with restrictions and higher expenses. You will also have to carry out more responsibility if something goes wrong. Usually, it’s best to ensure every subcontractor has insurance since this maintains clear responsibility and reduces additional risks.