Sub-contractors' insurance
Produced in partnership with Fladgate
Sub-contractors' insurance

The following Construction practice note produced in partnership with Fladgate provides comprehensive and up to date legal information covering:

  • Sub-contractors' insurance
  • Sub-contractor liabilities
  • Sub-contractor's own works
  • Common insurance provisions in standard form contracts
  • Common problems with sub-contractor insurance
  • What should the parties do?
  • Sub-contractor
  • Contractor
  • Employer

This Practice Note looks at how sub-contractors’ liability is typically covered by insurance and considers:

  1. difficulties that can arise in respect of sub-contractor insurances, and

  2. what should the parties involved in a construction project do?

Sub-contractor liabilities

Sub-contractor's own works

A sub-contractor will be liable for damage to its sub-contract works. This arises from its obligation to carry out and complete the sub-contract works (see Practice Note: Sub-contracting in construction projects). The liability is a liability for damage to property and would therefore be covered by a property damage policy, such as a Contractor’s All Risks policy (see Practice Note: Contractors’ All Risks (CAR) Insurance).

Remainder of the works

The sub-contractor would also be liable if its negligence, breach of contract or breach of statutory duty caused damage to the remainder of the works. This liability arises out of a legal liability. It does not arise out of any property interest the sub-contractor has in the remainder of the works. Strictly, it should be covered by a public liability policy. However, the lines are frequently blurred and sub-contractors’ liability in respect of the remainder of the works is frequently covered under a property damage type policy. In several cases, the court has found that the sub-contractor’s interest in the remainder of the works is a property interest.

This was considered in SEELE Austria KG v Tokio Marine Europe Insurance.

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