What is Subcontractor’s Public Liability Insurance?
Public Liability Insurance for Subcontractors refers to a special range of insurance policies, designed to address the needs of professionals contracted by other companies to work for them on specific projects and for a limited amount of time. It can protect efficiently against costly lawsuits counter the effects of faulty services in a smooth and rapid manner. See if it applies to you and how it can help.
Subcontractor’s Public Liability Insurance explained
The general liability insurance does not cover subcontractors. If you run a company and it employs subcontractors, it can be held liable in case of work errors. This means that, if there is any mistake leading to damage, loss of any kind etc., and if this is caused by a subcontractor, your company will be held liable. Even if it is generally insured, a regular policy will not provide cover in a situation like that; you need something that involves the subcontractors, too. Independent contractors represent your company for the whole duration of the collaboration. Legally, you will be unable to place the blame on them if your client has contracted you for the job. A policy, on the other hand, ensures adequate defense and financial protection.
The additional risks of subcontractors
Having work done in your name by subcontractors involves a new series of risks. They may be bringing their own tools and equipment and you won’t know how reliable those are (this is when you need Employer’s Liability Insurance). Or, they may be working with yours and fails to cater to those as expected. Whichever the case, you cannot know what to expect; accidents, injuries and damage may occur. The hiring company cannot control every aspect, yet it has the responsibility to pay out all the compensations, should clients opt to make a claim against it.
What happens when you’re not covered
You can be sued for any prejudice created by your work and that may be extremely damaging to your finances. The law does not require subcontractors to carry a liability insurance. Therefore it will be your duty to fix the issue and to provide compensation to your client. Projects can turn sour, customers can be injured and properties damaged. If the subcontractors you work with are not insured, then you become responsible for whichever harm they cause through their work and highly vulnerable.
Are there any alternatives?
There are situations in which companies fail to take out a suitable policy when dealing with subcontractors. In that case, they can replace the liability insurance with the request to be indemnified against any possible suits. The subcontractor then must accept to do this. It will not prevent lawsuits, but will transfer the duty to the subcontractor, which means they will pay for whichever damage and expense. It is also possible to opt for bonding. The contractor can thus pay a surety bond to the bonding company. That bond will be used in future to cover damages. Since it comes with certain limits, it may not always suffice.
If your business operations rely on short-term work, then you should consider Subcontractor’s Public Liability Insurance. The generic Public Liability Insurance may seem like it gets you covered whenever third parties are at loss, but it isn’t valid in any situation in the work field. To be sure you’re making the right choice, first you need to know one’s professional status with precision: are they treated by the law as a subcontractor or as an employee? Many industries are in a gray area — where is yours? According to that, you will be selecting the suitable type of insurance policy.
