Contractors Check List
Whether you are a one-man band or a contractor with a multimillion pound turnover, the most important aspect of you need to get right, from the off and on a year on year basis is your insurance.
At Construction Insure we have years of knowledge under our belts to make sure we get you the correct cover in place.
What does a contractor need to consider?
You need to define your works and be very clear as to exactly what you do. Break your works down into a percentage for each trade. You might just be 100 % one trade or you could have 4 different trades which are a split of 25 % each.
If you are carrying out any works that are even slightly high risk and are not part of an overall contract these works need to be noted out as works in isolation.
You need to declare exact turnover and wage rolls.
If some of your staff are labour only sub-contractors (temp staff who do not carry their own insurances) these need to be accounted for.
Then you have bona fide sub-contractors.
Many Contractors fail to understand what a sub-contractor is and if they are or aren’t there actual employee:
Bona-fide sub-contractors are generally thought to be contractors who work without direction from the insured, hold their own insurance and usually provide their own materials and tools.
However, there are several factors to consider before one can confirm that what you are speaking of is 100% a bona-fide subcontractor:
Take the example of a general builder constructing a house. A percentage of these works will involve plumbing and heating, for which the contractor may hire a plumbing company. This company may be a sole trader or a limited company either way if they have their own insurances, they will be bona-fide as they are separate to the insured. Recently the definition of a bona-fide subcontractor has been often misconstrued in the attempt to reduce insurance premiums. However just because a person has their own insurance this does not make them bona-fide. This is because under the master servant rule the employer will be held responsible under certain circumstance as to how they are working for you.
Ensuring you have adequate Insurance cover
"Master Servant Rue: A legal guideline stating that employers are responsible for the actions of their employees in many circumstances. If an employee acts negligently - even if the employer was not aware that the employee was doing so - the employer could face fines or a lawsuit"
These self-employed "employees" can still have their own insurance as it will allow them to do work outside of your company’s authority, however they should still be named on your insurance for the reasons mentioned above.
If you have a company and hire 5 full time people ensuring they all have their own insurance, this will not matter if they injure themselves or a third party, even if you pay them as self-employed. This is because under the master servant rule the employer will be held responsible under certain circumstance as to how they are working for you.
So, if you want to figure out whether what you are thinking of is considered bona-fide or not, follow these simple rules:
- Does the individual earn more than 20% of their wage from your company – If yes, they are not bona-fide.
- Do you order the individual around or does he work on a separate section of the job with no supervision on control? If orders are being given they are classified are classified as employee and not bona-fide sub-contractor.
- Is the individual a separate company doing an isolated specific task, such as roofing or plumbing for a new build? This is fine f you are not paying them more than 20 % of their annual wage.
- Is the person in question using your materials (vans, named clothing such as high vis jackets), and tools? If so he is not bona-fide.
Once you have your figures in place and declared properly, you need to decide if you need more than just a policy that covers your Liabilities.
Do you need a Contractors All Risk policy which will cover your liabilities, tools, plant and the contract you are working on? Or you may need a Contractors All risk policy which covers just your liability plant and tools.
Remember if you are a builder and you are doing a new build or doing a build which is an extension of a property, you will need Contract works cover, as liability cover will not suffice if something happens to the new structure you are building.
If you are working for a client, you might be asked to arrange a JCT or a building warranty/latent defects insurance. This is something you will need to come to us so we can advise you on the best policies to take out. But if you are undertaking your own contract again you could potentially need your own JCT put in place or Latent defects insurance.
As you can see for a contractor there is plenty to think about when it comes to Contractors Insurance.At Construction Insure are here to help and make sure you are properly insured.
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