Yes, public liability insurance cover subcontractors as well. If you are working as a subcontractor, you are vulnerable to various kinds of losses or damages. Moreover, if you are working as a subcontractor, you are more likely to be running your own small business. Even if you are working under someone, you would be held responsible for your actions.

It means, if any loss or damage is caused to third-party’s property due to your business activity, you would have to pay compensation to the other party.

It has been seen that at some construction sites, public liability insurance is compulsory. Most of the subcontractors are working in the construction sector, in a hazardous situation and therefore, it becomes necessary to safeguard yourself from all the costs and expenses which may arise if something goes wrong. In any case, public liability insurance will cover property loss or damage caused by you to another party. In any case, it doesn’t include the loss or injury that you suffer by yourself.

Here, it is important to note, the person or company who has hired your services, will not cover the costs associated with a claim, and therefore, it becomes necessary for any subcontractor to buy its own public liability insurance policy.

Those companies who hire subcontractors should make sure that all its subcontractors have public liability insurance cover in place. In those cases, where you and your subcontractor are responsible for the property damage, the responsibility to settle the claim would be divided.

As per the nature of your business operation, you can pay extra and expand your public liability insurance cover and get coverage for expenses arising out of-

  • Transportation
  • Natural calamities
  • Sudden and accidental pollution
  • Defence cost incurred with prior consent

Case: 1

R.S Contractor bagged a contract of constructing a school building in Pune. Considering the extensiveness of the project, the company hired the services of Jivesh Gupta who was the subcontractor in Pune and had some good years of experience in the construction field.

As part of the work, a construction worker dug a ditch at the construction site. A senior woman was passing through who tripped over in the ditch.

Luckily, the woman was taken out from the ditch within a time and was rushed to a nearby hospital where the doctors saved them. The woman asked for the compensation of Rs 10 lakh along with medical expenses coverage.

The woman filed a case against Jivesh Gupta who was the subcontractor. As Jivesh had a product liability insurance policy, he informed the insurer about the claim. The insurer investigated the matter and found that the construction worker was responsible for paying compensation as the accident happened due to his fault. He did not clearly mark the ditch. Also, there was no signboard outside the construction site to warn people about the ongoing construction work.

Read more: What are the different types of liability insurance?

The woman suffered serious injuries in leg and wrist, and the insurer agreed to pay compensation to the woman. Here, the product liability insurance company not only paid compensation to the woman but also covered medical expenses.

Case: 2

Shyam Prasad was an electrician subcontractor who got a contract for doing all the electrical installations at Kavita’s house. While he was rewiring part of a Kavita’s house, a fire broke out and caused minor damages. Later, it was found that the fire happened due to faulty electrical wires. As Shyam had a public liability insurance, it approached the insurer for the claim settlement.

Here, the insurance company initiated an investigation which revealed that the fire was caused by the electrician’s faulty wiring and therefore, it fell under the purview of public liability insurance. After evaluating the situation, the public liability insurance company agreed to pay the compensation to Kavita which Shyam was responsible for paying.

Without public liability insurance, it would have been difficult for Shyam to bear the cost of repair.