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Hiring Subcontractors? Whose risk is it anyway?

Hiring Subcontractors? Whose risk is it anyway?


Construction projects can vary substantially. There is often a need to increase the workforce in order to complete a project quicker, or when there is a lack of skill in the core workforce. Sub-contractors are often used by firms in order to meet these demands.

However, do you know who is responsible for public liability claims arising from their errors or breakages? What if they decide to sue you following an injury when working for you? Where do you stand under your existing liability insurance policies?

Understand the different types of Sub-Contractor

Labour-only vs Bona fide

  • Labour-only sub-contractors are more like temporary employees. They use your tools and equipment, you manage their timesheets, and you pay them a salary.
  • Bona fide sub-contractors on the other hand, are far more independent. They have their own tools and equipment, they invoice for the work they do, and they work without your supervision.

Who your insurance does and doesn’t cover

Generally, labour-only subcontractors will be included in your existing Public and Employers Liability insurance policies, as long as you have alerted your insurance provider to the hiring of extra staff.

The risk comes when you hire bona fide subcontractors. They are not covered by your insurance and need to have their own up and running before they sign on to work for you. Insurers need to be made aware of these as there is still a small risk to insurers. You are strongly advised to check their cover.

Public Liability insurance provides you protection for legal liability for accidental death and/or bodily injury to third parties and accidental loss or damage to third party property, arising out of the company’s business.

Whose risk is it anyway?

If one of your labour-only sub-contractors has an injury while working on a construction project for you, this should be covered under your Employers Liability insurance – as long as you have made your insurer aware that they are working for you.

With bona fide sub-contractors, the responsibility will depend on your contract with them and what is covered under both your insurance policies. You should always check that they have their own Public Liability cover which is the same level as yours.

Insurance is your responsibility

As a hiring contractor it’s your job to ensure the bona fide subcontractors have adequate cover. If they don’t, then your business can be held liable for any incidents caused by the subcontractor, even if you had nothing to do with it.

Liability for negligence is typically passed down through the chain of subcontractors, but if your bona fide subcontractor does not have the correct insurance then you may be held accountable for all the damages. It is vital to disclose all employees, labour only and bone fide sub-contractors when buying insurance to ensure you are adequately covered.

Read more: Construction & Trade Liability insurance

Get Public and Employers Liability insurance with Alexander Swan

Insurance policies keep your business safeguarded against being sued and having to pay hefty fees and compensation should something go wrong on site. Contact Alexander Swan and let us find you the right insurance to protect your business, finances, and your reputation.

Dedicated to finding you the right insurance cover for you, your business and your property.

T: 0800 458 0082

E: info@alexanderswan.co.uk