Is public liability insurance needed for a building company that uses contractors?

[NicoleM]

Afternoon all

This looks like a really good site for useful help! We've just started a business where we help people project manage their builds by managing a team of contractors that work for us. We do not carry out any of the work and the contractors that we use have their own liability insurance. However, we're at a bit of a loss as to whether we would need insurance. We effectively schedule the build, get the contractors and materials in and collect the money from clients.

Any advice would be wonderful!

Thanks

Nicole

 

[paulears]

The public would sue you wouldn't they? If you could guarantee that any legal proceedings would be against your sub-contractors, you won't need it. Can you? I doubt it - who do the clients pay? If it's you who takes their money, their grievances will be aimed at you I would have thought.

 

[NicoleM]

Thanks Paul
We've got contracts with our sub contractors stating they are liable for their work and having the right insurances. We also ask to see the insurances too.
But you're right, we handle the clients money and pay sub contractors direct, so they could complain to us but then couldn't we complain/sue the contractor??

 

[Newchodge]

PUBLIC LIABILITY. This is insurance in case a member of the public is harmed by your work. Can you envisage a situation in which this could happen? Only you know your contracts and your contractors. personally, I would not risk it.

Suppose one of your contractors builds a scaffold that fails, killing 10 people. Your contractor, despite your contract, had not bothered to get insurance and immediately went out of business. Who do you think would be liable in law?

 

[KAC]

With whom does the client have a contract? Does that client have contracts with the individual sub-contractors? You say you merely project manage but are you actually acting as principal?

 

[NicoleM]

Thanks Kac, the client has the contract with us and then we have a contract with the contractors.

Thanks Newchodge, that's a fair point. Even though we've checked the contractors have insurance doesn't mean they maintain it, so we could be liable.

 

[S2K]

Nicole, do you actually check your subcontractor insurances? This is equally important. Is there adequate cover?

 

[KAC]

If you are engaging sub contractors, you may also require Employers Liabiliy Insurance dependent upon the status of the sub Contractor.

 

[smallclaimsassistance]

As someone who has spent decades dealing with multi-party industrial, employment and public liability litigation, you need to focus less on your potential liability, and more on the possibility of allegations being made against you. The most bullet proof contracts with your contractors don't stop someone blaming you for the actions of others. You may eventually be vindicated, but with no PL insurance, YOU will have to pay lawyers to fight any cases against you.

Also, as intimated above, as an entity retaining a subcontractor, you have a legal obligation to ensure that they are competent and are adequately insured. If they fall short in either respect (even a one day lapse in insurance), the claims revert to you.

I have successfully assisted a couple of small businesses with injury claims made against them, and, not surprisingly, they both used the same terminology in their initial instructions, including the phrases "worried sick", "can't sleep", etc. It would be bad enough for you to experience those feelings through your own conduct, but it would be much worse if through the conduct of another organisation.

Either way, there is no good reason for you NOT to obtain PL insurance. You should find that your reduced exposure limits your premium.

Dean

 

[NicoleM]

Thanks for the advice, I've started looking into getting insurance. Not cheap is it!!!

 

[smallclaimsassistance]

Never is! Best of luck.