Contractor insurance checks: avoiding costly claims in the construction sector

In today’s property and construction sector, working with subcontractors is a routine part of delivering projects efficiently and effectively. However, while this approach offers flexibility and access to specialist skills, it also introduces certain risks - particularly if a subcontractor’s insurance cover isn’t up to standard.

Overlooking this can lead to potentially lengthy and expensive complications if a claim needs to be made in relation to the work.

 

The risks of inadequate subcontractor insurance

When a subcontractor doesn’t have the right insurance in place, or their cover is insufficient for the activities they’re carrying out, it can have serious consequences.

Insurers may decline the claim altogether, leaving the principal contractor to shoulder the costs. This can include direct financial losses, legal fees involved in pursuing the subcontractor, and wider cost implications if the project is delayed as a result.

Claims of this nature can quickly become complex and expensive. Aside from the practical issues, they can also damage client relationships and lead to reputational harm. Prevention is always better than a cure, and that starts with clear processes around subcontractor insurance.

 

Getting the basics right before work begins

One of the most effective ways to protect your business is to confirm that each subcontractor carries adequate insurance before any work starts. This means checking that the type of cover is suitable for the specific activities they'll be performing, and that the level of cover meets the project's requirements.

Clarity in contracts is also key. Sub-contractor agreements should clearly state which classes of insurance are required - such as public liability, employers’ liability, or professional indemnity, and the minimum levels of cover required to protect the works. This clarifies expectations from the outset and provides a contractual basis for managing any disputes that may arise later.

 

Keep documentation up to date

Once insurance details have been provided, they should be carefully reviewed and kept on file. It’s good practice (and can be a policy condition) for the principal contractor to:

• request copies of insurance certificates and policy schedules, and


• make sure the insurances are reviewed, updated and renewed throughout the project timeline.

 

Get advice that’s tailored to your project

The steps outlined above can go a long way toward reducing the risk of disputes and delays - but every project is different. So too are the insurance needs involved. That’s why it’s important for both principal contractors and subcontractors to speak to a specialist insurance adviser.

 

We can help

At Fidentia Insurance, we work closely with businesses and contractors across the property and construction sector to help them manage their risks and meet their contractual obligations. If you’d like guidance on insurance requirements for your next project, our team is here to help.

To speak to one of our experts, call us at +44 (0) 20 3150 0080 or email info@fidentiains.com to request a callback.