Should Subcontractors Have Separate Insurance When on Site?

Caeva O'Callaghan | May 9th, 2023

If you take on a big project, you may be considering bringing in outside help. But do subcontractors need their own insurance?

Any subcontractor who does work for their own clients should have their own public liability and builders’ insurance.

Subcontractors are covered by the main contractor’s employers’ liability insurance – but only if they have it. It’s better for subcontractors to have their own cover than not.

In this article, we’ll cover the following questions:

  • Do my subcontractors need to have their own insurance?
  • As a subcontractor, do I need to have builders’ insurance?
  • What is employers’ liability insurance?

If you are a subcontractor with your own insurance, you benefit from extra peace of mind, and may be able to negotiate a better rate from the main contractor.

Builders should always check they have cover

If you have been hired to do a building project on a client’s house, and are looking for subcontractors to do some of the work, you are the main contractor.

As a builder or a tradesman employing subcontractors, you should make sure you have the right builders insurance to protect yourself as well as those who are working for you.

From an insurance point of view, you may have three types of people working 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 any 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.

You’ll need to give your insurer a lot of information to make sure everyone’s clear. Your insurer may not agree with your assessment of whether a subcontractor is labour-only or bona fide, and if you check that all of your subcontractors have their own insurance, you may be in a position to negotiate a discount on your premium.

Contractors’ all risks insurance

If you have a large building project underway – for example, a new house, extension or refurbishment – you may want to consider getting contract works insurance, or contractors’ all risks (CAR) insurance. This will protect your project from floods and fire, and it covers damage to materials and equipment, including hired-in equipment.

The main part of contractors’ all risks insurance is the contract works section which provides cover for the property being worked on. In insurance parlance, “all risks” means that the policy will cover any loss or damage to the property and/or materials other than certain specific exclusions. Generally speaking, these exclusions can be things to do with the existing structure (if any), errors or omissions in design, penalties, damage to external structures not part of the contract, and defective property.

CAR insurance is important to have if you plan on subcontracting a large or important part of the project to someone else. If there are many moving parts to a project, there’s more that can go wrong.

Subcontractors should be insured separately

If you have been hired by a builder or a tradesman to take on work on their project, you are a subcontractor. Subcontractors often depend on the main contractor to have employers’ liability insurance, but it’s always in your best interest to have your own.

You may be able to negotiate a better rate from the main contractor if you have your own insurance. Any contractor worth their salt should ask you if you have your own insurance, to protect their interests.

As a subcontractor, you should have your own builders’ insurance. This will cover you for public liability, products and materials, and accidental damage as an extra.

When you take on a job, inspect the contract carefully. Generally, the main contractor will require the subcontractor to have public liability insurance and will specify the indemnity limit that policy needs to have. The indemnity limit is the maximum that the insurance will pay in the event of a claim.

Even if your main contractors’ insurance covers public liability, it’s best to have your own. This is because a claim could be made against you, the subcontractor, at any time. Often this happens because someone who has suffered a loss will see a company name on a van and make their compensation claim against that company, assuming they are responsible.

While it may be possible to pass the compensation claim to the main contractor’s insurance to deal with, it’s not always a straightforward process. Having your own public liability cover – at the very least – will make matters a lot easier.

Want to know what kind of builders insurance you may need? Give us a call today and talk to our builder’s insurance experts, and we can help you find the right insurance for your business.








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