Hiring a contractor? There’s a bit of extra homework you’ll need to do before they start
Gleaming references and a boast worthy resume - you might be hiring a contractor, but your reasons for recruiting are probably very similar to hiring a new employee. Whether you’re experiencing an unprecedented busy period, or you don’t have the budget for a permanent employee, there is one extra piece of homework you’ll need to do before handing over the contract – check yours’ & your contractors’ insurance coverage.
We’ve broken down the different types of cover both you as an employer, and your contractors may need before your contractor starts working for you.
Insurance as an Owner
As the owner of your business, you may already have some insurance cover in place, such as Workers Compensation, Public & Products Liability and/or Business Insurance. Professional Indemnity insurance is also mandatory to be held by some professions for their practice.
If you’re about to hire a contractor or thinking of hiring one, we recommend you review your insurance firstly to make sure your policy will cover you for insured incidents that result from the actions of your contractor - “vicarious liability”. You’ll also need to consider if the activities covered by your insurance reflects all the activities conducted by your contractor. Your policy will only covers incidents which relate to the services listed on your policy schedule.
What does your contractor need to do?
In addition to insurance policies you hold, your contractor may need to have their own Public & Products Liability and/or Professional Indemnity Insurance policies. If your contractor is providing a professional service, they will also need to take out their own Professional Indemnity insurance. If your contractor is not conducting professional services or providing any written or verbal advice, then they may only require Public & Products Liability Insurance.
Before hiring a contractor, always ask them to provide you with a Certificate of Currency. The Certificate of Currency should include the following information:
- Insured name of the person or company
- Period of cover – if the cover is due to expire during the period of the contract, request a follow up certificate near the renewal date
- The services/activities which will be performed by the contractor
- The limit of indemnity / sum insured they have should also be shown on the certificate
Remember to request updated certificates of currency from your contractors annually if they are contracted on an ongoing basis.
If you’re about to hire a contractor or thinking of hiring one, we recommend you review your insurance.
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