Towergate Insurance explains how to protect yourself when hiring a subcontractor
Hiring a subcontractor is a standard part of the construction industry, and it’s not without its benefits. But, when you hire a subcontractor, it’s important to make sure that you put in place good risk management systems help prevent financial losses and avoid liabilities.
The different types of subcontractors
Labour-only subcontractors: They work under your supervision using materials, equipment, and tools that you’ve provided. Usually, you determine their hours and direct where and how they work. You may even pay them a salary. You are legally required to have employers’ liability insurance for them.
Bona fide subcontractors: They set their own hours, get paid by invoice, work without supervision, and supply their own tools, equipment, and materials. You do not need employers’ liability insurance for bona fide subcontractors, but you should ask for proof that they are licensed and that they have public liability insurance before you hire them. If they have any staff, make sure that they’re insured too.
Risks to consider when hiring subcontractors
Before you hire your subcontractor, ask for references and examples of their past work. Make sure they have the experience you need, that their quality level matches your own, that they’re not cutting corners and that they’re properly licensed and insured.
Ask your subcontractor to agree in writing to your agreements. Sign a contract that holds them accountable for their work and protects you from any damages they cause.
This risk transfer agreement is one of the most important parts of your working relationship, because it clearly outlines who is responsible when losses takes place.
Trade insurance
At Towergate Insurance we provide tailored trade insurance to suit the specific needs of your business whether your business is in construction, builders merchants or in a specific trade such as carpentry, plumbing, painting and decorating, or one of the many trades we cover.
Visit towergateinsurance.co.uk/trade-specific-insurance for more information, or contact 0330 828 5586 to speak to one of our expert advisers.
