What is Liability insurance?

Liability insurance also called third-party insurance, is a part of the general insurance system of risk financing to protect the insured from the risks of liabilities imposed by lawsuits and similar claims and protects the insured if the purchaser is sued for claims that come within the coverage of the insurance policy. Originally, individual companies that faced a common peril formed a group and created a self-help fund out of which to pay compensation should any member sustain a loss (a mutual insurance arrangement). The modern system relies on dedicated carriers, usually for-profit, to offer protection against specified perils in consideration of a premium. Liability insurance is designed to offer specific protection against third-party insurance claims, i.e., payment is not typically made to the insured, but rather to someone suffering loss who is not a party to the insurance contract. In general, damage caused intentionally as well as contractual liability are not covered under liability insurance policies. When a claim is made, the insurance carrier has the duty and right to defend the insured.

Labour-only Subcontractors (LOSC)

Labour-only subcontractors are additional employees that you hire to assist with a build project that is too large or complex for your full-time staff to handle in a timely manner. As these subcontractors are employed for the duration of the build project, you are required to pay them the same wages as your full-time staff and classify them as employees. In addition, your firm must cover each labour-only subcontractor under your employers’ liability and public liability insurance. The defining attributes of labour-only subcontractors are:

• They work under employers’ supervision and direction.
• They use employers’ materials, kit, equipment and tools.
• They must comply with the employers’ health and safety policies.
• They do not have a guarantee for work done and may leave part way through.

Bona-fide subcontractors (BFSC)

Bona-fide subcontractors are hired to complete a specific job, such as plumbing or electrical work on a build project that your full-time staff is not capable of completing on its own. As your firm would be hiring them for a specific job, you would pay them as if it were a separate job, typically via invoice. In addition, because they are working independently of your firm, bona-fide subcontractors should have their own liability insurance. The important characteristics of bona-fide subcontractors are:

• They work under their own supervision and direction.
• They provide their own materials, kit, equipment and tools.
• They are responsible for their own health and safety.
• They may have additional employees.
• They carry out risk assessments and are responsible for their own guarantees and maintenance.

Clegg Gifford & LOSC and BFSC

Clegg Gifford have a heritage in providing Commercial policies and have access to a flexible panel of Liability Insurers who includes provisions for LOSC and BFSC. We can also combine Liability offerings with that of Motor and or Material Damage.

We search the market to find the most applicable policies for our clients and as a Lloyds broker can deal with specialist London Market insurers.