Using subcontractors does not necessarily transfer the Consultant’s professional liability exposure to the subcontractor.

A client may still pursue the primary Consultant where work performed by a subcontractor forms part of the Consultant’s engagement.

Can my Professional Indemnity policy cover claims arising from a subcontractor’s work? #

Some Professional Indemnity policies can cover the insured business’s liability arising from work performed by appointed subcontractors or sub-consultants.

The exact cover varies between policies.

This does not necessarily mean the subcontractor’s own liability is insured.

Should subcontractors have their own Professional Indemnity Insurance? #

Where appropriate, Consultants should consider requiring professional subcontractors to maintain their own insurance.

Factors to consider include:

• The type of service being subcontracted.
• Potential claim severity.
• Contractual requirements.
• The subcontractor’s qualifications and experience.
• Whether the Consultant remains responsible to the client for the work.

What should I tell the insurer? #

Disclose material subcontracting arrangements, particularly where subcontractors perform professional services forming part of the Consultant’s deliverables.

The insurer may ask about:

• Percentage of work subcontracted.
• Types of services outsourced.
• Whether written agreements are used.
• Whether subcontractors hold their own Professional Indemnity Insurance.

The policy wording should be checked rather than assuming all subcontracted work is automatically covered.