Subcontractors - The Importance of Checking Insurances

An information bulletin describing the need to check that Bona Fide Subcontractors have the correct insurances.

Bona Fide Subcontractors are used by many businesses to provide specialist services to customers and to deliver services over a wider geographical area.

Businesses will operate various systems for assessing and monitoring Subcontractors and one key element to this process is checking the adequacy of their Insurance cover.

A specific Insurance Condition requiring Policyholders to maintain a system of checking Bona Fide Subcontractor Insurances is often precedent to liability. This could in some cases result in Insurers refusing to provide an Indemnity in the event of a claim involving a Bona Fide Subcontractor if the Condition has not been met.

It is therefore essential to ensure there is a suitable system in place for checking Insurances. This does not need to be complicated but should identify key information prior to the Subcontractor commencing work with an annual review at the time of the Subcontractor’s Insurance renewal to ensure adequate cover on a continuing basis.

Darwin Clayton can help and provide a simple Insurance Questionnaire for standard Employers and Public Liability to be completed by Subcontractor’s Insurers / Insurance Brokers. Using these is not compulsory but they are useful tools and can be adapted to specific requirements. Alternatively a copy of the Policy Schedule may be provided but please note that a copy of the Employers’ Liability Certificate is not sufficient as this does not provide any evidence of Public Liability cover. A “To Whom It May Concern” letter is also useful; however, this will not provide proof that the activity you have asked them to undertake is covered specifically.

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