Contractors vs employees can affect an engineering firm’s Professional Indemnity exposure because responsibility for professional services may differ.
Insurers may want to understand:
- what work is subcontracted
- whether the contractor is an individual or another engineering business
- the engineering disciplines involved
- whether the contractor has their own PI Insurance
- who signs or certifies the work
- who is contractually responsible to the client
- whether subcontractor agreements contain appropriate insurance requirements
A contractor having their own insurance does not necessarily remove the engineering firm’s exposure.
If the client engaged the firm to provide the professional services, the firm may still be responsible for work performed on its behalf.
The firm’s own Professional Indemnity policy should therefore be checked to confirm how subcontracted professional services are treated.
Whether a worker is legally an employee or independent contractor is a separate issue from how the Professional Indemnity policy responds. The classification depends on the actual working relationship and should not be determined solely by the label used in the contract. See the Fair Work guidance on independent contractors for current information.
