Sub contractors - who is responsible for the insurance ?

[steve23]

Hi all,

Company 'A' has out sourced a job to company 'B' who have then sub-contracted the job to me.

When I talk to company 'A' i present myself as a manger from company 'B' etc but bill company 'B' as myself.

The job itself is carried out by two persons who I pay on a self employed basis.

They are aware that they are self employed (and do not work for me) and are responsible for their own tax and NI.

I also agree, as per them being self employed, that they can change who attends the job and related matters etc

So - after all that preamble - who in the above is responsible for having in place relevant insurance - such as public liability ?

Also, if no-one has any PLI - whilst that may be a bit dumb (or very dumb I would agree) is it a legal requirement ?

All the best

Steve

 

[Atilla]

Surely you should all have your own PL Insurance.

 

[steve23]

No - I've come across quite a few sub contracted individuals that do not have any PLI.

But looking around insurance companies, it would seem that if I use sub contractors it is my responsiblity to insure they hold relevant insurance - but none of the 'blurb' explains what happens if i dont - i take it then I would probably be laible.

But what about the company who is sub contracting to me - they have not asked to see any insurance details - so would liability pass to them.

Bit confusing for my little brain ?

All the best

 

[IANL]

Get PL and Employers Liability.

Employers Liability you must have and they need to cover you sub's. PL you would be wise to get as you will be liable if they damage any third party property.

Would put more info but have to go out.!!

 

[Atilla]

No - I've come across quite a few sub contracted individuals that do not have any PLI.

But looking around insurance companies, it would seem that if I use sub contractors it is my responsiblity to insure they hold relevant insurance - but none of the 'blurb' explains what happens if i dont - i take it then I would probably be laible.

But what about the company who is sub contracting to me - they have not asked to see any insurance details - so would liability pass to them.

Bit confusing for my little brain ?

All the best

You represent yourself/company, you should/must have insurance. Same applies for others.

Just because someone previously didn't have any doesn't make it right.

 

[Tom McClelland]

Get PL and Employers Liability.

Employers Liability you must have and they need to cover you sub's. PL you would be wise to get as you will be liable if they damage any third party property.

Would put more info but have to go out.!!

Surely by definition Employers Liability cannot cover subcontractors? They need their own cover.

 

[steve23]

Funny enough I was just looking at the employers liability cover, and there is indeed times where a subcontractor would mean you need ELC - but there is a check list (like when working out if they are really self employed for tax) and in my case I would not need it.

All the best

Steve

 

[longleaf1]

Surely by definition Employers Liability cannot cover subcontractors? They need their own cover.

I've got Employers Liability that covers subbies.

 

[Astaroth]

Whilst your contract may state another party is a subcontractor the law may not always agree; hence there is EL that will cover subbies.

PL is not a statutory requirement however can be a contractual one. Its been a while since I did my CII exams but from memory effectively the claimant would have the option of either claiming against the individual that caused the damage or alternatively against the organisation they hold their contract with; in your example Company A.

Company A however would be entitled to either pull in the party that caused the damage or again follow the contract (which undoubtably would have an indemnity clause) and counter claim of Company B

Company B can then claim off the subby.

Obvious problem can come where contracts are poorly written (or well from the suppliers point of view) or where one party doesnt have the funds (or insurance) to pay the other party. It would be possible for a co-defendant to be called but my limited experience was that it was rarely done.

 

[steve23]

So overall - and talking just cold hard facts - I am better off as it stands if the company that has sub contracted to me does not stipulate any insurance issues in our contract as then they would end up being the party claimed against if there was an issue.

Just food for thought really - I dont want to operate without insurance !

 

[longleaf1]

Basically yes, but i'd still get it, not expensive and you know you are covered then for any other contracts that may require it.

 

[Simply Business]

Hi Steve,

Just thought I would echo a previous post that public liability is not a legal requirement - however - as you have also said it's a bad idea to work without it. But if you have any employees you must have employers liability as it's actually a legal requirement. The key is what's defined as an employee.

If you are free to go through your situation in a bit more detail please let me know via http://www.simplybusiness.co.uk/social/online-customer-support

I will be happy to just confirm with you where you stand.

Kind Regards

Tim

 

[IANL]

Surely by definition Employers Liability cannot cover subcontractors? They need their own cover.

Bit late back into this but not always. I used to use subbies you were 'freelance' but they were acting under our control.


I did have case when a third party delivery company let a flight case roll off the back of a taillift and it struck a subbie on the ankle. He was off work for about 10 days. I only emgaged him for the day. We made our insurance aware of a potential claim but it was settled by the delivery drivers company/PL insurance. Otherwise we would ahve been resonsible as it happened while he was working for us and it would have been a claim under our EL.

YOu just need to let the insurance company know.

 

[Alwaysinterested]

I use subbies all the time and insist on seeing copies of their PL insurance or they don't work for me simple

If they burn down a building while working for me the building owners insurers are coming after my insurance as you would expect but then as i dont want increased premiums i'm happy knowing that my insurers will counter claim my subbies insurance as it should be

I wouldnt touch any company or person to carry out work for me including the window cleaner with PL, my window cleaner broke tiles on my roof, denied it was him so got rid of him, new guy was pestering me to clean my windows, conservatory, gutters etc etc Asked if he had any PL insurance suprise suprise no, had a heated debate just didn't seem to get it that it is in everyones interest including yes the insurance companies to have it

And i hate insurance as much as the next person

 

[virtuallysorted]

I suppose one way round it would be to have the Company A contract simply say that Company B and any subcontractors are not responsible for any damage or loss incurred during the course of the contract?

(Naive??)

 

[carolinebrown]

We are responsible for the insurance

 

[steve23]

Ok - just to clairify with an example...

Bodger builders get a job to buid a conservatory. They cant make it to the area, so sub contract it to me - Able builders Ltd. I am too busy, but I know it will take 2 guys to do it, so I get a couple of chaps in who are self employed and ask them to build the conservatory.

These guys are aware that they are responsible for their own tax and NI, supply their own equipment to do the job and have overall operational control of what they do and how they do it - even using other manpower instead of themselves if they wish.

If one of these guys causes damage to Mr Passer-By, who does Mr Passer-By claim off ?

And if, once he tries to claim, it turns out that the self employed guy does not have PLI, what then happens ?

All the best

Steve

 

[longleaf1]

Ok - just to clairify with an example...

Bodger builders get a job to buid a conservatory. They cant make it to the area, so sub contract it to me - Able builders Ltd. I am too busy, but I know it will take 2 guys to do it, so I get a couple of chaps in who are self employed and ask them to build the conservatory.

These guys are aware that they are responsible for their own tax and NI, supply their own equipment to do the job and have overall operational control of what they do and how they do it - even using other manpower instead of themselves if they wish.

If one of these guys causes damage to Mr Passer-By, who does Mr Passer-By claim off ?

And if, once he tries to claim, it turns out that the self employed guy does not have PLI, what then happens ?

All the best

Steve

My thoughts would be you - Able builders Ltd unless the self employed guys had there own insurance, i find this is pretty slim.
So you have 2 options, use guys with PL insurance only or get it yourself to cover them.

If neither have PLI, then circumstances would be factored into the situation - if the guys were labour only subs, no materials etc etc then i think it would be fair to say you would be at fault and liable.

Someone correct me if i'm wrong but thats how I see the situation.

 

[TheGuru2010]

Ok - just to clairify with an example...

Bodger builders get a job to buid a conservatory. They cant make it to the area, so sub contract it to me - Able builders Ltd. I am too busy, but I know it will take 2 guys to do it, so I get a couple of chaps in who are self employed and ask them to build the conservatory.

These guys are aware that they are responsible for their own tax and NI, supply their own equipment to do the job and have overall operational control of what they do and how they do it - even using other manpower instead of themselves if they wish.

If one of these guys causes damage to Mr Passer-By, who does Mr Passer-By claim off ?

And if, once he tries to claim, it turns out that the self employed guy does not have PLI, what then happens ?

All the best

Steve

Hi Steve, In reality they could claim from either of you, if he had no insurance im pretty sure the passer by would come for you. someone has rightly pointed out above that all your insurer will do is recoup from the guy at faults P/L - You must always decalre subbies to your insurer's depending on how often you use them they sometimes come free or for v little extra. You must always make sure that your subbies P/L cover is the same limit as yours, i would also advise for you to keep a copy.

 

[TheGuru2010]

My thoughts would be you - Able builders Ltd unless the self employed guys had there own insurance, i find this is pretty slim.
So you have 2 options, use guys with PL insurance only or get it yourself to cover them.

If neither have PLI, then circumstances would be factored into the situation - if the guys were labour only subs, no materials etc etc then i think it would be fair to say you would be at fault and liable.

Someone correct me if i'm wrong but thats how I see the situation.

I would imagine the 1st people that would be contacted with the claim would be bodger builders. The insurers would then deal with it from there.

 

[scribe]

If things go wrong they will go to the top of the food chain
in your case yourself, it's called passing the buck.I would make sure everyone on site has PL and also adhere to all H/S . I have been in that situation, fortunately i did all of the above. You have to look after No1
that's unless you can afford a big law suite around your neck.

 

[steve23]

Yes, I was thinking that as I have no PLI that covers the two guys, then it would go to Bodger.

But if he has no PLI either, what happens then ?

Has any law been broken as I thought PLI was optional ?

I must stress, that I want to have the neccessary insurance in place, and PLI is not costly at all, but the problem I have is that if I want to include the 2 self employed guys on my PLI, then they would (for insurance) count as employed by me - so then I would also need employers liability insurance.

And then the cost goes up ten times !

And that is just money that I dont have at this stage :-(

 

[TheGuru2010]

Do these definitions below help?

Labour only subcontractors

Sub-contractors that are employed as "labour only" work under your supervision and direction, and use your materials, tools, etc. A contractor would normally take on labour only subcontractors to assist with a job that requires extra employees. The sub contractor is paid wages by the main contractor and is classed as an employee. Employer liability insurance is therefore required by law for each of these people.

Bona-fide subcontractors

Sub-contractors that are used as "bona-fide" work under their own supervision and direction, and provide their own materials, tools, etc. A contractor would normally take on bona fide subcontractors to perform a particular job within his larger contract that he is not able to do (i.e. a building contractor constructing a new house may call upon a plumbing contractor to do all the plumbing in the new home that he is building). The sub contractor is paid by the main contractor as if it was a normal separate job for a customer. The sub contractor should have their own liability insurance in place but it is vital that the main contractor checks this for their own protection.

Which one do they fit into?

 

[longleaf1]

Yes, I was thinking that as I have no PLI that covers the two guys, then it would go to Bodger.

But if he has no PLI either, what happens then ?

Has any law been broken as I thought PLI was optional ?

Again here my thoughts are

customer would claim off bodger,
bodger would then claim off you
you would then claim off subbies but honestly think you would have bucklys chance of getting anywhere if they were just labour only

 

[steve23]

Hi,

Yes, I am confident that they fall into the second category and are not employed by me.

But this bit is the issue for me...

"but it is vital that the main contractor checks this for their own protection"

So what happens if they dont have it - I have not checked, but Bodger builders who have sub contracted the job to me has also not checked - so are not Bodger the ones in the fireing line at the end of the day.

I must stress, I am not comfortable with this issue, as if no one has any inurance then its the poor person who gets hurt or whatever that could loose out - but by the same token I dont want to loose the job - its the money from this job that will allow me to get the insurance in the end !

However, interesting enough, there is another avenue open to me, and, given that PLI is quite cheap, I might just insist the two self employed chaps have PLI but pay it for them - still far far cost effective for me that having to buy employers liablity, but not the best thing in the long run.

Ho Hum.

 

[TheGuru2010]

Hi Steve,

Let me know if i am on the right lines here

Bodger Builder have the contract from the client
Bodger Builders for what ever reason have asked you to do the job?

In what sense have they asked you to do the job, have they provided the materials & everything & left you to it?

Thats the 1st part we need to establish.

 

[longleaf1]

Simple then. I doubt that many Bonafide subbies won't have it.
Don't take them on if they haven't got it.

 

[TheGuru2010]

Steve,

If it helps at all im more than happy to have a chat to go through this with you?

 

[steve23]

Hi,

THEGURU - yes, happy to talk, what's the best number to get you on ?

All the best

Steve

 

[TheGuru2010]

Hi Steve,

Any of the numbers that are on my sig,

Thanks

 

[TheDavecable]

Hi Steve,

had a good read over your question and replies. To be honest, I wouldn't get involved in anyone who doesn't have PL, just saves any fallbacks. With any of these questions, I have always been able to fall back on the support of SJD Accountancy, who have a great article on Insurance for Contractors that you may find helpful.

Just clearly explains the different types of insurance available to contractors and who is responsible. Hope this helps

 

[Insurance Expert]

Steve, I hope this helps you!!

Firstly if you have Public Liability that will cover you where it is deemed you are negligent for accidental injury/death to third parties and accidental damage to third party property. This protects you from claims made directly against you by a thrid party or where Company A's (or B)insurer tries to pass on a claim made against Company A or B (this is probably a big exposure for you). Things tend to get past down the chain where negligence applies.

If the guys you pass work onto only get work from you I would look into the legal aspect in more depth, I am aware of occasions where they are classed as employees even when the intention for you is not to give them any employee rights. This puts you at risk under the Employers Liability legal requirements. On this note though, EL cover would only be a couple of hundred pounds extra if you are taking PL and EL cover together, based on 2 or 3 workers / dependant upon trade/activites.

It is common under contract conditions to stupulate who is responsible, I expect company B are responsible to check their sub contractors have adequate insurance, but they probably don't check.