Public liability insurance and subcontractors

Putting the question into context

The policy needs to match the work as it is really done. A tidy trade name on its own does not tell an insurer enough.

Cover applies within the stated dates, activities, limits and conditions. That sounds plain, but it is where many misunderstandings begin.

The day-to-day exposure is easier to judge through examples. For this subject, look at: a subcontractor causes damage on your contract; their certificate has expired; and their trade falls outside your own insured activities. Each example can involve different facts and exclusions. Mention it if it forms part of the work you undertake.

Do not rely on memory if you can check: how many subcontractors you use and what they do; whether they supply their own tools and decide how to work; and what evidence you collect from them. Read the answer back as though you were checking somebody else’s form.

Set the certificate beside the full policy documents. The certificate confirms useful basics, but it cannot show every condition. An unexplained clause is a reason to ask a question, not to guess.

Where the exposure comes from

The following examples are worth discussing if they occur in your work:

• A subcontractor causes damage on your contract
• Their certificate has expired
• Their trade falls outside your own insured activities

The cause, timing and people involved can all change the outcome. Keep that in mind when reading the wording.

Use “their certificate has expired” as a test case. Picture the actual premises and the people moving through them. Then check whether the activity, location and possible damage all fit the description you plan to submit.

Compare it with “a subcontractor causes damage on your contract”. One may concern injury and the other property damage, yet both could arise from the same working area.

If the policy provider would be surprised to hear about the example, the original description probably needs another look.

What to check before starting the form

A hurried estimate can cause confusion later. Check:

• How many subcontractors you use and what they do
• Whether they supply their own tools and decide how to work
• What evidence you collect from them

Confirm “how many subcontractors you use and what they do”, “whether they supply their own tools and decide how to work” and “what evidence you collect from them” with the customer, organiser or contractor where necessary. Written details are easier to check than a remembered telephone conversation.

A customer may later read only the certificate. You should still keep the fuller schedule and endorsements for your own records.

Two reminders from this page are “check certificates rather than taking a verbal promise” and “employers’ liability may still be relevant”; keep them beside the documents when you check the quotation. If the policy takes a different approach to “how many subcontractors you use and what they do”, ask about it before the cover is needed and retain any written reply.

If the provider asks for an estimate, make a fair one and note how you arrived at it.

Do not skip the endorsements

• Check certificates rather than taking a verbal promise
• Employers’ liability may still be relevant
• Keep records for the contract period

Pay attention to instructions that use words such as “must” or “always”. Ask what happens if a condition cannot be followed on a particular job.

Before you submit the quote

Read a recent contract and compare its insurance clause with the limit and business description you plan to buy.

A short written record can save a long disagreement about what was said when the cover was arranged.

Do not discard the earlier policy when a new one begins. A claim can arrive well after the work was completed, so the documents in force at the time may still be needed.

Do not let the following point get buried: keep records for the contract period; check how this affects the jobs you accept and ask for clarification if the policy takes a different approach.