Contractors Insurance Checklist

Understand Bona Fide Sub-contractors

Bona fide sub-contractors work without direction from you, hold their own insurance and usually supply their own tools and materials.

For example, a general builder constructing a house might hire a separate plumbing company. If that company holds its own insurance, it’s likely to be bona fide, since it operates independently of you.

Having their own insurance alone doesn’t automatically make someone bona fide, though. Under the master servant rule, an employer can still be held responsible for how someone works for them, even if that person is technically self-employed.

To check whether someone counts as bona fide, look at:

• Whether they earn more than 20% of their income from your company. If they do, they’re not bona fide.
• Whether you direct or supervise their work. If you do, they’re classed as an employee.
• Whether they’re a separate company doing an isolated task, such as roofing or plumbing on a new build. This is fine as long as you’re not paying them more than 20% of their annual income.
• Whether they use your materials, vans or branded clothing. If they do, they’re not bona fide.

It’s worth naming genuine bona fide sub-contractors on your own policy anyway, for extra protection. And if you employ full-time staff directly, their having their own insurance doesn’t remove your responsibility under the master servant rule if they injure themselves or someone else at work.

Getting your Cover Right

There’s a lot to work through as a contractor, from defining your trades to understanding who counts as an employee. Our team can talk you through it and make sure your policy matches how you actually work.