Hiring a contractor or sub-contractor is often appealing to time-poor, cash-strapped small business owners. One big reason is that they take care of their own insurance (as opposed to the business owner having to provide coverage for them, as is the case with employees). But what if things aren’t quite that straightforward?
Is your Insurance Policy covering the subcontractors you use in your business? The answer is NO! Insurers do not include subcontractors under liability insurance policies. If they did this, the insurer then accepts the liability for all of the work that the subcontractor undertakes.
Imagine the following scenario. You hire a treelopper (subcontractor) to cut a tree and he damages the roof of the house whilst removing the tree. What was a $1000 job results in $100,000 in damage. It will then be for the insurer to decide whether the policy will respond to this incident or deny liability. It may leave you responsible to pay the costs for damages for work of which you knew nothing about. Costs which could be in the tens of thousands of dollars or higher, depending on the incident.
The best way to ensure a subcontractor you use has their own cover in place is to obtain a Certificate of Currency from them. A Certificate of Currency will provide you with the information that is on their policy and can give you reassurance that they have cover and that you may not have significant out of pocket expenses.
For more information or questions on subcontractors cover, or your own policy, please contact
Rashmi Soni, Horticulture Scheme Manager at Fitzpatrick & Co.