What Insurance Do Contractors and Subcontractors Need?

Scott Norton, Managing Director – Norton & Co Insurance

27 August 2020

Contractors and subcontractors don’t enjoy all the same benefits as internal employees do, including insurance cover. So, if you’re working as a contractor, you may be wondering what type of insurance you need to have your back covered. Or, maybe you’re a business owner who’s wondering whether your contractors are adequately insured. Keep on reading to find out the essential insurance types needed for contractors.

Must-have insurance for contractors and sub-contractors

The two must-have types of insurance for contractors and sub-contractors are professional indemnity and public liability insurance. Both of these insurance policies need to be valid starting from the first day of work.

Next up, we’ll go over what each of these two types of insurance cover.

Public liability insurance for contractors

Public liability insurance is the first one out of the two types of crucial insurance for contractors. It covers damage to property and personal injury to other people. Here are some examples:

  • Damage or loss of goods
  • The employees of a contractor
  • Third-party injuries
  • Legal costs of a claim

Professional indemnity insurance for contractors

Professional indemnity insurance covers the business owner for legal liability relating to advice or services offered to clients. All contractors offering advice against a fee need professional indemnity insurance. Examples of contractors who can benefit from professional indemnity insurance include:

  • Graphic designers
  • IT consultants
  • Project managers
  • Business coaches and advisors
  • And more.

Why insurance is important for contractors

There is great financial risk in hiring an uninsured contractor, including litigation. Besides, there are legal risks at play. We’ve all seen news stories on businesses getting sued for millions of dollars! Not to talk about the risk to your reputation if an accident or injury were to occur without insurance cover. Don’t forget, in the age of social media information spreads fast!

There may also be other types of insurance that are relevant to a contractor, such as insurance against loss of income. However, public liability and professional indemnity are the most crucial.

Is your insurance up to date?

Whether you’re hiring a contractor or you’re the contractor being hired, both parties have a responsibility to ensure adequate insurance cover. It’s essential for everyone involved to take the necessary steps to manage risks before the work begins. This includes understanding what policies you have in place and what they cover. As a business owner, remember to ask contractors to present insurance certificates to you before commencing work. As a contractor, if the business hiring you claims their insurance covers you, ask to see the certificates as well.

Talking to a professional insurance broker can help you feel more confident that you have the right kinds of insurance in place. If you need assistance with choosing the right insurance, the team at Norton & Co can help. With the right insurance policies and work processes in place, you can feel confident your business is covered if anything bad was to happen.

General Advice Disclaimer

This information does not take into account the objectives, financial situation or needs of any person. Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation or needs.

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