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Does Builders’ Insurance Cover Subcontractors’ Equipment?

Caeva O'Callaghan | April 20th, 2021


Do Subcontractors need their own insurance?

If you’re a builder hiring subcontractors, you need to make sure they are fully insured. But will the equipment they use fall under your own builder’s insurance policy?

The answer is: No – never.

If you hire in subcontractors to take on some of your workload, their equipment is not covered by your own builders’ insurance. Your builders’ insurance will only cover your own site, equipment and materials.

Read on to answer these questions:

Always take the time to find a decent subcontractor who is fully insured. If you do not, this could result in a big headache for the both of you – and your client – later on.

What does builders’ insurance cover?

If you operate as a builder or tradesman, you need to have specialist insurance for your business. This will allow you to work in others’ homes safely, and will cover the costs of repairing unintentional damage to property as well as injuries to others.

Building sites are dangerous, and without insurance you may find it difficult to find clients willing to take a risk on you. If things go wrong, you could find yourself disastrously out of pocket.

When you take out builders’ insurance, you will need three types of liabilities included in your policy. These are:

Public liability is the most important part of builders’ insurance. It protects your customers or any member of the public in the event that a claim should arise and you are responsible.

You may also add on extra insurance for your equipment, tools and machinery you either own or hire in.

What insurance do I need for subcontractors?

When someone starts working for you, you’ll need to tell your insurance provider. From their point of view, there are three types of people who could work for you:

  • Employees who work with you permanently or part-time
  • ‘Labour-only’ subcontractors, who work under your supervision using your tools and materials
  • ‘Bona fide’ subcontractors, who typically make their own decisions and use their own tools and materials

If you have employees or labour-only subcontractors, you’re legally required to have employers’ liability insurance. This protects anyone who works for you against accidents, theft, and other workplace risks.

But if you have subcontractors, you do not need extra sub-contractors insurance. At minimum, they should have their own public liability insurance – if they do not, you will be responsible for paying any damages. But if they also do not have their own equipment insurance, that’s their fault. They cannot make a claim on your insurance for any loss or damage to their equipment.

Your insurer may not agree with your assessment of whether your subcontractor is labour-only or bona fide, so give them as much information as you can to make sure everyone’s clear.

What if my subcontractor hasn’t got insurance?

Imagine you are building a house. You aren’t skilled in plumbing work, so you subcontract this part of the build to local plumbers. In essence, you are subcontracting the plumbing portion of the project.

Things go perfectly, and your client is happy with their new home. However, a few months after your clients move in, their radiators stop working So, the homeowners contact you – the builder. You investigate the problem and discover they have been installed incorrectly.

If you cannot work out an amicable solution, it may result in the homeowner suing you for repairs. In this situation, you must notify your insurer as soon as possible. They can then look after the claim, defend you, and ideally push it on to the subcontractor’s insurance company (i.e. the plumber’s insurance).

But if the plumbers you subcontracted to don’t have valid insurance? They could easily disappear off the face of the earth. And as you were at fault for hiring them without checking they had the necessary cover in place, those repairs and legal costs would come out of your pocket.

The same also applies if the subcontractor loses or damages their equipment while on-site. They should have the necessary protection in place – otherwise, it would come out of their pocket.

Talk to our experts about your builders insurance

Hiring subcontractors comes with many risks, so be sure to give us a call and talk to our builder’s insurance experts today so we can find the right insurance for you.

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All Information in this post is accurate as of the date of publishing.