If you use sub-contractors in your business, you need to know if, how and when they are covered by liability insurance.
But firstly, it’s important to define what sub-contractors are, and how they differ from independent third parties.
What is a sub-contractor?
When sub-contractors are hired by a business, they are providing their services to the business’s customers. They issue tax invoices which are paid through the business’s accounts system, rather than the payroll department.
An example of a sub-contractor would be a (non-employee) carpenter that provides services for a construction company.
What about independent third parties?
While all sub-contractors are independent third parties, not all independent third parties are true sub-contractors!
The difference is that true subbies contribute directly to the business’s main service, whereas independent third parties do not.
Bookkeepers and cleaners for example would be considered independent third parties in a construction firm, as they provide services for the business, but not its customers.
What does this mean for insurance cover?
This distinction is important for insurance purposes. If the work of your sub-contractor causes injury or property damage, you would be held liable.
This means you should declare your subbies to your insurer, and ensure they are covered under your public liability policy.
You are also liable if any of your sub-contractors get injured on the job. Even if they have their own workers’ compensation cover, there could be a claim made against your policy.
The bottom line is that if you hire sub-contractors, you should ensure they are included on your public liability and workers’ compensation policies. In addition, before hiring any subbies, make sure they have their own public and products liability cover in place.
Contact your local Reliance Partner to get a no-obligation insurance assessment.