Within Australia, being a subcontractor or a ‘subbie’ is quite common, especially within the building, construction and trades industries.
In our earlier blog post Engaging Subcontractors and Vicarious Liability, we discussed the ways in which contractors can protect themselves against any potential vicarious liability claims.
As a subcontractor, you should also be working to ensure you are adequately protected against any potential claims that may arise as a result of your engagement with a contractor.
Below we have addressed a number of areas you should consider prior to entering into a sub-contract.
Have I Reviewed My Contracts?
This may sound like a no-brainer but you would be surprised at the number of businesses who enter into contracts without thoroughly reading the terms and conditions.
It is important that you do examine what has been set out in the contract to ensure that your obligations or requirements are reasonable and accurate.
Namely, are the scope of services set out in the contract within your capabilities? Are you able to meet the requirements expected of you as the subcontractor?
Failing to do so may land you in hot water in the event a claim arises and you are found liable based on a clause in the contract that was not acknowledged prior to signing – therefore leaving you unprepared for the potential consequences.
For that reason, we strongly recommend you consult with your broker prior to entering into any new subcontractor agreements so as to identify any possible insurance exposures.
Have We Exchanged Proof of Insurances?
When entering into an agreement with the contractor (principal), ensure you have provided them with proof of your own insurances.
This will generally be in the form of a certificate of currency.
As a subcontractor, common types of insurances you are required to hold depending on your business activities include Public Liability, Professional Indemnity or Income Protection.
Likewise, it is also important that you as the subcontractor request proof of insurances held by the principal and have your insurance broker review these to identify any further exposures.
Am I Remaining Diligent?
Even as a subcontractor, it is important that you remain across the project until the overall completion.
In doing so, you can identify any minor issues that may have an impact upon you before they become major, even if your role within the project is completed.
It is not uncommon for claims to arise well after a project is completed so it pays to remain invested and aware of any developments so you are well prepared if any issues were to arise.
Will I Be Engaging My Own Subcontractors?
In order to complete the services set out in your agreement with the principal, you may choose to engage subcontractors to perform part of the tasks that you are unable to yourself.
If this is the case, you will need to contact your insurance broker to inform them that you have engaged subcontractors to ensure any necessary changes or revisions are made to your insurances so you are protected under this new agreement.
You will also need to request proof of insurances from your subcontractors for your insurance broker to review, so as to protect yourself from any exposures such as vicarious liability.
The important take-away from this article is to consistently involve your insurance broker when it comes to entering into new agreements as a subcontractor.
Making sure that you have a firm understanding of what is set out in your contract and what is expected of you will go a long way to protecting you against any nasty surprises in the event of a claim.
If you would like any further information about protecting yourself against risk as a subcontractor, please contact us.